SteelMint: India's low-grade iron ore export index down $8/t, w-o-w

SteelMint's weekly export index for low-grade Indian iron ore fines (Fe 57%) decreased by $8/t, w-o-w, to $30/t FOB east coast India. Rising winter production curbs in China and declining demand have pulled down prices.

The spot price of benchmark iron ore Fe 62% fines decreased by $4.35/t, w-o-w, on 28 Oct'21 to $113.15/t CFR China as against $117.5/t a week ago. DCE iron ore futures' Jan'22 contract closed at RMB 683.5/t ($107) (-RMB 23.5), d-o-d.

China's demand for low-grade iron ore is expected to remain dull over the Sep-Dec'21 quarter amid restrictions on industrial activities that have been put in place ahead of the Winter Olympics as well as the cap on steel output.

China's iron ore imports are forecast at 342.67 mn t in Sep-Dec, as per China Iron and Steel Association data. This equates to monthly average iron ore import of 85.67 mn t, much lower than average monthly import volume of 97.5 mn t in 2020.

In the long run, China's energy-saving measures and steps taken to contolemissions China are the key factors likely to affect steel output in China.

Also, as per CISA, China is making all-out efforts to reduce reliance on imported resources. It will continue to develop its energy sector to support modernisation. Greater efforts will be put into developing domestic iron ore resources and raising production.

As per data maintained with SteelMint, total iron ore exports from Indian ports for the week (17 Oct-23 Oct) were recorded at 127,300 t as against 62,096 t in the past week.

Rationale:

• Price indicators- No confirmed deal was reported in the current publishing window and hence given 0% weightage under T1 trade.
  
  
• SteelMint received seven (7) indicative prices and offers during the current publishing window, and three (3) were considered for price calculation as T2 inputs, given weightage of 100%.
  
  

Market highlights:

• Iron ore stocks rise at Chinese ports rise: Iron ore inventory at major Chinese ports increased to 142.3 mn t this week as against 140.2 mn t a week ago, as per data maintained by SteelHome.
  
  
  
• OMC to auction low-grade iron ore: OMC has scheduled 50,000t of iron ore fines e-auction for Fe58% grade ore on 2Nov.