India: Low-grade iron ore export index falls marginally, no deals heard

SteelMint's weekly export index for low-grade Indian iron ore fines (Fe 57%) decreased by $1/t w-o-w to $44/t FoB east coast India. Iron ore export prices continue to decline amid persistently weak Chinese demand.

"No buying is witnessed in the market for low-grade material amid poor liquidity in China due to high coke prices," a trader shared.

"It is true that there has been a sudden rise in global iron ore fines prices by around $12/t in the last two days. But market participants are still not confident about the market fundamentals and expect further correction in prices," a trader said.

However, iron ore demand may pick up as restocking demand is expected from end-users with Chinese steel mill margins remaining at a healthy level due to a sharp fall in iron ore prices offsetting rising coal and coke prices at the moment. Spot iron ore fines prices (Fe 62%) increased this week from $136.5/t CNF China to $149.45/t CNF China.

As per data maintained with SteelMint, total iron exports from Indian ports for the week (15-21 Aug) were recorded at 155,310 t compared to 243,851 t towards the last week of Jul'21.

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:

• DCE iron ore futures up: Benchmark iron ore futures on the Dalian Commodity Exchange picked up by 1.7% on 26 Aug'21 on hopes of demand recovery in China. DCE iron ore futures Jan'22 contract closed at RMB 816/t ($126) (+RMB 13.5).
  
  
• Iron ore stocks up at Chinese ports: Iron ore inventory at major Chinese ports increased to 128.8 mn t last week as against 127.2 mn t in the preceding week, as per data maintained by SteelHome.
  
  
  
• Freight rates stable, w-o-w: Freight rates for 50,000-55,000 t export vessels from east coast India (Paradip) to China remained stable at $27/t, w-o-w. However, quarantine and demurrage charges remain matters of pressing concern adding to costs.
  
  
• 8,000 t of iron ore fines booked at JSW auction: JSW Steel had scheduled an auction for 23,700 t of Fe 55-58% iron ore fines on 25 Aug'21 from its Jajang mine in Keonjhar district, Odisha. The company fetched bids for two lots (each comprising 3,950t) at the base price of INR 2,000/t ex-mines (including royalty, DMF and NMET). JSW Steel has scheduled another auction for 23,700 t of Fe 52-55% iron ore fines on 31 Aug'21.
  
  
• Goa to conduct 26th iron ore e-auction: The Directorate of Mines and Geology (DMG) of Goa plans to conduct the 26th e-auction for 2.037 mn t of iron ore on 27 Aug'21. The material to be put to auction consists of fines, lumps, and ROM with the highest-grade reaching Fe 58.01%. The auction is being held after a gap of almost five months.