Seaborne Iron Ore Prices Expected to Remain Strong Post Holidays - Keyvan Jafari Tehrani

Seaborne iron ore prices in China are less likely to witness any significant decrease for next two months, said Mr. Keyvan Jafari Tehrani, CEO at Jame Tejarat Co. (JTC). Following are the excerpts from SteelMint interview with Mr. Tehrani.

1. How do you see the current seaborne iron ore market in China, prior to Lunar New Year Holidays?

As we know Chinese market is closed from 15 to 21 Feb'18 amid spring festival which will result in limited trade activities for almost 2-3 weeks. The seaborne market is expected to be strong enough for a week more due to end users facing shortage of cargoes, forcing them to restock the materials before the Lunar new year holidays.

2. Do you expect seaborne iron ore prices to pick up sharply post Lunar New Year Holidays, like in March'18?

Post the Lunar New Year holidays, market participants are expecting prices to remain stable but significant decline in prices is less expected. The President of China during the 20th National Congress of the Communist Party of China will be officially undertaking position in March'18, followed by new reforms and projects, which is expected to push the prices upwards. The expected increase in prices post holidays, accompanied by strong positive feedback from market is supporting the price rise and material stocking by the mills up to the end March 2018. Also the projects announced by President Xi Jinping have created optimistic sentiments has further strengthened the market sentiments.

3. Has any new iron ore mines or pelletizing complexes begun operations in last couple of months in Iran. How has it added to the country's supply?

Iran is close towards achieving self-sufficiency in need for pellet by reduction in imports to facilitate domestic production and consumption as evident from reduced imports in past two years. To further diminish imports, Iran has already put up new mines to operations and few more expected to be initiated during next Iranian year i.e post 21st March'18 to facilitate production and consumption domestically.

4. How are sentiments for iron ore export from Iran on current scenario of depreciating currency?

Iranian currency has devaluated by 40%, a month ago, which otherwise enhances commodity exports. But, this has not boosted iron ore exports from Iran.as its share in China iron ore imports has not seen any significant improvement. In 2013, Iran contributed around 2.3% of total China iron ore imports which have dropped down to around 1% at the end 2017. Iran generally exported 18-18.5 MnT iron ore to China in 2017, so in total Iran iron ore exports in CY17 is expected to be roughly around 21.5-22 MnT.

5. Any major changes in vessel freight rates?

Freight rates for Supramax vessels from Iran to China have witnessed an increase in past two months. Freight rates from Iran (Bandar Abbas port) to China is hovering around USD 17. However for Handymax vessels is around USD 18-18.5. The increase is contributed by the expected reform changes to bring about 15% export duty on Iranian fines and lumps after the Iranian new year i.e post 21st March'18, forcing to load maximum vessels before the new year begins.

6. Any changes in iron ore export duty from Iran expected?

The Iranian Deputy Minister has announced maximum iron ore fines and lumps to be consumed domestically and is inhibiting exports. For the same, an expected export duty of 15% may be imposed. However, the announcement has not received much encouraging feedback for such a reform by local miners and traders, which may nullify such an imposition.