SteelMint: India's low-grade iron ore export market cools off after futures fall

Indian iron ore export market turned subdued today after benchmark iron ore futures fell sharply. However, earlier this week few deals were heard to have concluded at increased offers. SteelMint's weekly low-grade Indian iron ore fines (Fe 57%) export index has moved up by $12/t to $102/t FoB east coast India. Demand for low grade ore remained weak on stricter pollution control norms in China amid demand for high grade fines and pellet.

Chinese spot iron ore fines index hit a new high of $233.1/t CFR China yesterday against $202.85/t CFR China last week. Improved demand outlook and surge in futures resulted in price hike. A few deals of Indian low-grade exports were heard to have concluded earlier this week.

Confirmed low-grade iron ore export deals:

"Markets are very uncertain at the moment. With the sharp decline in futures today, there are hardly any bids. Also, there are some rumours on additional port charges being levied at few Chinese ports for Indian cargoes which is emerging a matter of concern" , shared an Odisha based exporter.

As the Chinese authorities are more vigilant on another round of plant inspection of emission outside northern China to maintain the production cut target for the year. Therefore, steel mills may lower the demand for low-grade ore in the near short term.

Dalian iron ore futures fell by 9% d-o-d as market participants paused after consecutive spikes that sent the futures (iron ore) prices to historical highs over the past few days. DCE iron ore futures Sep contract closed at RMB 1,216.5/t (- RMB 120.5 d-o-d)

Rationale:

• Price indicators- Two confirmed deals were reported this week. Both were considered for price calculation and kept the weightage 50% under T1 trade.
  
  
• SteelMint has received Nine (9) indicative prices and offers during the publishing window, and all were considered for price calculation as T2 inputs and given a weightage of 50%.
  
  

Market highlights:

Freight rates increase further - Freight rates for 50,000-55,000t export vessels from east coast India (Paradip) to China increased by around $3-4/t w-o-w to $ 21-24/t.

Iron ore stocks at Chinese ports fall sharply- Iron ore inventory at major Chinese ports declined by around 3 mn t to 128.03 mn t this week as compared with 131.05 mn t, a week before as per the data maintained by SteelHome.

Domestic iron ore prices rise - Odisha based miners have significantly raised domestic offers. Price indications for Fe 57% fines are at INR 4,000-4,400/t ex-mines, including Royalty, DMF & NMET.