India: Low-grade iron ore export index falls by $6/t, w-o-w

SteelMint's weekly export index for low-grade Indian iron ore fines (Fe 57%) dropped by $6/t to $38/t FoB east coast India. Indian iron ore export offers continue to decline as news of further steel production cuts in China affect buying sentiments.

High coke prices continue to weigh on buying interest of iron ore with excess alumina and silica. Hence, Chinese demand for low-grade iron ore continues to drop.

A low-grade fines (Fe 57%) export deal was heard concluded at around $40-42/t FoB last week.

Iron ore pricing sentiments recovered this week in China beginning with the onset of peak construction season demand in Sept-Oct as well as the belief that prices may hit rock bottom.

Steel demand and production usually recover in the peak season, i.e. Sept and thereby contribute to boosting iron ore demand. However, due to cutbacks in steel production, pig iron output may fall further this month and thereby depress iron ore demand.

India's iron ore export shipments witnessed a significant fall in the absence of firm Chinese buying interest. Export shipments stood at 0.45 million tonnes (mn t) in Aug'21 as against 2.05 mn t in Jul, according to vessel line-up data maintained with SteelMint. Shipments have fallen to over three-year lows since 0.3 mn t in Feb'19. China continued to remain the largest importer of Indian iron ore in Aug with 0.40 mn t, down 80% as against 2.05 mn t in Jul.

As per data maintained with SteelMint, total iron exports from Indian ports for the week (29 Aug-4 Sept) were recorded at 82,800 t compared to 100,650 t a week ago.

Rationale:

• Price indicators- No confirmed deal was reported in the current publishing window and hence given 0% weightage under T1 trade.
  
  
• SteelMint has received seven (7) indicative prices and offers during the current publishing window, and five (05) were considered for price calculation as T2 inputs, being given a weightage of 100%.
  
  

Market highlights:

• Spot iron ore fines prices down, w-o-w: Spot iron ore fines Fe 62% decreased by around $7/t, CNF China on week to $133.05/t CNF China on 8 Sept as against $139.70/t CNF China a week ago.
  
  
• DCE iron ore futures up: DCE iron ore futures' Jan'22 contract closed at RMB 730/t ($113.07) (-RMB 43.5), d-o-d.
  
  
• Iron ore stocks increase at Chinese ports: Iron ore inventory at major Chinese ports increased to 131.4 mn t last week as against 129.4 mn t in the preceding week, as per data maintained by SteelHome.
  
  
  
• Freight rates down marginally: Freight rates for 50,000-55,000 t export vessels from east coast India (Paradip) to China dropped marginally to $26/t this week as against $27/t last week. However, quarantine and demurrage charges remain matters of pressing concern adding to costs.
  
  
• JSW's low-grade fines auction receives no bids: JSW Steel had scheduled an auction for 23,700 t of Fe 55%-58% iron ore fines yesterday (8 Sept'21). The auction did not receive any response with the entire material remaining unsold. The company used the MSTC platform (a government undertaking) to conduct the e-auction from its Jajang mine in Odisha's Keonjhar district. The floor price for the auction was at INR 1,500/t (including royalty, DMF and NMET).