China had registered highest ever single day gain of USD 11/MT in iron ore prices on yesterday and traded Fe 62% fines at USD 62.6/MT. In the meantime, Chinese domestic billet offers rose by USD 40-50/MT and export offer by USD 30/MT to USD 295-302/MT, FoB China. Similar bullish sentiments are prevailing in CIS market and billet FoB Black Sea offers up by USD 10-15/MT.
Will it impact Indian market?
Indian market is not highly co-related to global sentiments due to recent implementation of MIP on import of semi finish and finish steel. However, imported scrap and iron ore export market attract bullish sentiments.
Iron ore export offer: Currently, export offers for fines Fe 58/57 iron ore are assessed at USD 54.8/MT, CFR China, where export duty is zero. With zero export duty, market participants are expecting that low grade iron ore export from India will reach at 5-5.5 MnT till the end of FY16. Blending of high grade ore with low grade will ease high inventory in mines.
An iron ore miner said, “Before budget, there was no taker of iron ore. Removal of duty generated quite few query. It will surely ease the inventory along with financial liquidity.”
HMS scrap offers: In 2016, it is expected that India will import about 5.2 MnT imported scrap in overall 100 MnT global scrap trade. Turkey, being a major buyer, had already increased offers by USD 20/MT. Therefore, exporters will surely inched up Indian offers by minimum USD 10-15/MT, considering global pricing.
An imported scrap supplier quoted, “We have already sold 17,000 MT HMS scrap to Pakistan at USD 220-225/MT. Indian buyers are presently reluctant at higher offers. Due to MIP, they expect global prices will not impact Indian offers.”
Billet export offer: China, being a major exporter of billet in global market, has surged its billet export offers by USD 30/MT and if it sustains, billet price index will increase. Yesterday, FoB offers had touched the level of USD 295-305/MT; highest since Sept’15.
India’s billet export majorly to Bangladesh has increased due to nil export duty. A billet manufacturer located in Durgapur (West Bengal) concluded an export deal of 1,000 MT billet to Nepal at INR 22,500/MT ex-plant.
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