- Market participants await results of China’s Third Plenum
- Iron ore fines spot, futures prices drop w-o-w
- Portside demand falls in China for Indian ore
BigMint’s weekly Indian low-grade iron ore fines (Fe 57%) export index inched down by $0.5/t w-o-w at $58.5/tonne (t) FOB east coast on 18 July 2024. An exporter said that a deal for around 55,000 t of Fe 57% fines was concluded from the East Coast at a 25-26% discount in this publishing window. Another fines (Fe 54-55%) deal was heard concluded by an eastern India-based exporter a couple of days back. The deals could not be confirmed at the time of publishing this assessment.
Iron ore export prices remained rangebound this week following weak buying interest from China amid the ongoing third Plenum. Mixed opinions were received by the steelmakers as they are uncertain about near-term market dynamics.
An iron ore exporter said: “Fe 62% iron ore fines prices in China dropped this week after touching the $115/t CFR China level last week. Major exporters kept their offers on hold as they are waiting for market clarity and expecting a rise in prices after the Third Plenum of the Chinese government. However, a few export deals were concluded from India.”
The drop in fines export prices led to a drop in cargos from India to China as major exporters remained sidelined. Buyers in China demanded higher discounts in the declining market which prevented iron ore export deals from India”.
As per sources, market players in the iron ore market have mostly stepped back amid China’s Third Plenum, opting for a more cautious approach in the current market.
As per Chinese sources, currently, there is enough supply of Indian iron ore fines in the Tangshan area, and this week the price remained weak due to lower demand from steel mills. Major steel mills are buying Australian special fines because the price difference between Indian and Australian lower-grade fines is decreasing. The mills find it cost-effective to purchase special fines because they have lower alumina content compared to Indian fines.
Price indicators
- No confirmed deal was from the East Coast reported this week and not taken into price calculation under T1 trade and given 0% weightage in the index calculation. For detailed methodology Click here.
- BigMint received fifteen (15) indicative prices in the current publishing window and thirteen (13) were considered for price calculation as T2 inputs and given a 100% weightage.
Iron ore inventories in China’s major ports decreased by 0.6 mnt to 150.2 mnt on 18 July compared to the last week, according to SteelHome data.
Factors impacting seaborne market
- Iron ore spot prices rangebound w-o-w: The benchmark iron ore fines index inched down by $1/t w-o-w to $105/t CFR China on 17 July. The price drop was due to weak sentiment leading to a further decline in economic expectations. No positive economic news from China this week eroded market confidence. Some steel mills have already started reducing production to balance margins.
- Portside offers in China fall w-o-w: Portside offers in China of Indian iron ore fines (Fe57%) fell by RMB 10/t ($1/t) w-o-w on 18 July. Offers were recorded at around RMB 605/t ($86/t) at Qingdao Port, including all import taxes and port charges. D-o-d, portside prices increased by RMB 5/t ($1/t) today.
- DCE futures fall w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for September 2024 contract decreased by RMB 16.5/t ($2/t) w-o-w to RMB 811.5 ($112/t) on 18 July. However, prices showed some recovery today and increased by RMB 6.5/t d-o-d against RMB 805/t ($111/t) yesterday.
Outlook
Seaborne iron ore export prices are expected to remain volatile as major iron ore exporters from India have kept their offers on hold amid the uncertainty of near-term market sentiments. Prices are unlikely to rise sharply in the near term amidst weaker Chinese demand and additional global iron ore supplies.
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