India: Lack of buying interest from China weighs on low-grade iron ore exports

SteelMint's weekly export index for low-grade Indian iron ore fines (Fe 57%) fell by $3/t to $35/t FOB east coast India. Indian iron ore export sentiments fell as iron ore and steel demand in China edged lower. Many regions in China have already witnessed steel prices fall from the peak and prices could find it hard to bounce back for the rest of the year.

The demand for low-grade ore from China is expected to remain weak due to cuts in steel output and energy consumption, further pressuring iron ore prices.

The bearish outlook on the property market has triggered panic across related markets. The market expects stricter governance measures to be taken against the property market, which would result in slow steel demand growth.

Production curbs in 2021 have crushed demand for iron ore, with stricter regulations imposed on Chinese steel mills in recent months. With Chinese crude steel output over the first seven months of the year growing 8% on the year, the country has clamped down for the rest of the year with the aim of limiting steel production.

Crude steel output in Aug'21 fell 13% year on year, data from the National Bureau of Statistics (NBS) showed. As a result, demand for lump ore as well as fines and pellet have been falling since the highs seen in mid-Jul.

Mills are reselling contracted cargoes to lower their iron ore inventories in light of production curbs, with cargoes of both fines and lumps heard sold in the secondary market at discounted levels.

The approaching Golden Week holidays has activated restocking demand and hence spot prices rebounded this week.

"There are hardly any offers or bids in the market currently. Some of the unconfirmed bids for Fe 57% fines were heard as low as $45-50/t CFR China", an eastern India-based miner informed.

Rationale:

• Price indicators- No confirmed deal was reported in the current publishing window and hence given 0% weightage under T1 trade.
  
  
• SteelMint received ten (10) indicative prices and offers during the current publishing window, and six (06) were considered for price calculation as T2 inputs, given a weightage of 100%.
  
  

Market highlights:

• Spot iron ore fines prices down by around $2, w-o-w: The spot price of benchmark iron ore Fe 62% fines fell by $2.4/t to $108.9/t CFR China today (23 Sep). However, the prices picked up slightly d-o-d as against $107.55/t CFR China on 22 Sep. Seaborne iron ore prices rebounded as restocking resumed before the Golden Week holidays.
  
  
• Iron ore stocks decrease at Chinese ports: Iron ore inventory at major Chinese ports decreased to 130 mn t this week as against 130.1 mn t in the preceding week, as per data maintained by SteelHome.