SteelMint: India iron ore export index falls marginally as trades remain muted

SteelMint's weekly export index for low-grade Indian iron ore fines (Fe 57%) stands at $29/t FOB east coast India, lower by $3 w-o-w.

During the Winter Olympics in Feb'22, curbs will possibly be implemented on both blast furnaces and iron ore sintering in China, which is expected to keep production on the lower side. This in turn is likely to weigh down demand for iron ore.

China data reveals that the steel output reduction target can be met as scheduled. Total reduction of crude steel production during Jan-Oct reached 65.482 mn t. According to inferred data, crude steel output in Nov will be around 68.19 mn t and, therefore, during Jan-Nov'21, total output reduction will be 85.698 mn t.

Hence, the task of reducing crude steel output in CY'21 by 26 mn t compared to CY'20 can be achieved if the Dec output is no more than 95.531 mn t.

The spot price of benchmark iron ore Fe 62% fines decreased w-o-w, on 2 Dec to $98.35/t CFR China as against $100.1/t a week ago.

Also, a major Australian iron ore miner has announced the sub-grade iron ore discount for super special fines (SSF). According to sources, the iron ore miner has set the discount for SSF fines for the month of Dec'21 to 41% against 42% in Nov.

As per SteelMint data, total iron ore exports from Indian ports for the week (21-27 Nov) was nil compared to 31,882 t last week.

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 seven (7) were considered for price calculation as T2 inputs, given weightage of 100%.
  
  

Market highlights:

• Iron ore stocks rise at Chinese ports: Iron ore inventory at major Chinese ports increased to 150.9 mn t last week versus 150.2 mn t a week before, as per data maintained by SteelHome.
  
  
  
• DCE iron ore futures down: DCE iron ore futures' May'22 contract closed at RMB 609/t ($95.53), down RMB 24.5/t d-o-d.
  
  
• OMC to auction iron ore fines and lumps : State-run Odisha Mining Corporation (OMC) has scheduled auctions for iron ore fines and lumps on 3 Dec'21. Around 800,000 t of iron ore lumps and 1.1 mn t of fines will be put up for auction from OMC's mines. The miner has cut the base price for fines by up to INR 1,000/t and that of lumps by up to INR 850/t against the last auction on 2 Nov.