India: Low-grade iron ore export index stable, sentiments remain bearish

SteelMint's weekly export index for low-grade Indian iron ore fines (Fe 57%) remains stable at $38/t FOB east coast India. Indian iron ore export sentiments continue to drop amid China's steel production controls.

Chinese mills usually start buying more iron ore two to three weeks ahead of the October Golden week holidays. However, as per market participants, demand may not be at similar levels as that of last year. Iron ore supplies in the market are on the higher side with numerous Oct'21 loading cargoes. The market is over-supplied.

Although Chinese mills have low inventory levels, procurement has been on the lower side due to uncertainties around steel production curbs, a potential downside to prices in Q4. According to data from the China Iron and Steel Association (CISA), the average daily crude steel output of key steel companies in early-Sep stood at 2.0449 mn t, a decrease of 7,800 t from the previous month, or 0.38%. Early Sep production witnessed a year-on-year decrease of 4.29%. China is ramping up steel output controls in a bid to curb carbon emissions.

"The Fe 57% Indian iron ore fines export price is at around $40/t FOB India levels but no deals have been heard to have concluded. Also, buyers' interest is on the lower side for iron ore cargoes," shared a trader.

"Sustained high coke prices in China have reduced the appetite for low-grade ore. Also, the quarantine and demurrage charges continue to exert downward pressure in the low-grade exports market," informed a global trader.

As per data maintained with SteelMint, total iron exports from Indian ports for the week (5 Sep-11 Sep) were recorded at 36,200 t compared to 82,800 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 received eight (8) indicative prices and offers during the current publishing window, and five (05) were considered for price calculation as T2 inputs, given a weightage of 100%.
  
  

Market highlights:

• Spot iron ore fines prices down $24, w-o-w: The spot price of benchmark iron ore Fe 62% fines fell by $24/t to $106.5/t CFR China on 16 Sep. The prices dropped by around $7/t d-o-d. Steel production curbs in China along with weak Aug steel output data weighed on Chinese buying interest.
  
  
• DCE iron ore futures down: Dalian iron ore futures fell by 3% on 16 Sep as China's steel output was recorded lower for the third straight month in Aug. DCE iron futures' Jan'22 contract closed at RMB 670.5/t ($104) (-RMB 22).
  
  
• No bids for OMDC iron ore tender: The Orissa Minerals Development Company Ltd. (OMDC) had issued a tender for sale of 62,450 t of screened and crushed iron ore fines and lumps (in the Fe 58%-65% range) from its Bhadrasahi iron and manganese mines in Odisha's Keonjhar district. The due date of the tender was 14 Sep. The tender failed to fetch any response.