Indian iron ore exporters are hesitant to export iron ore over declining global iron ore prices. Exporters are in a dilemma about the global iron ore market as the market is becoming day-by-day more volatile.
Since, global iron ore prices have dropped down to around USD 5/MT, starting May’16, Indian iron ore exporters are hesitant to conclude any deal. Current prices for Fe 62% fines are assessed at USD 60/MT, CFR China on 05 May’16.
As per index, current offers for Fe 57% Indian iron ore fines would come around at USD 38-39/MT, FOB India and USD 45-46/MT CFR China including all the cost i.e.hedging, freight, logistics etc. The expected buying by Indian exporters for Fe57/58% fines would come around at INR 1,800-1,900/MT, FOR, West Coast.
A west coast based major exporter also concluded a deal at around USD 43/MT, FoB India including hedging cost and at USD 49/MT, CFR China, when the prices were high last week. However, as the global iron ore prices dropped down, no such deal has been concluded yet.
Indian iron ore exporters are in wait- and- watch situation to see in which direction the global market moves. Some market participants believe that global prices will increase depending upon production cut due to Upcoming Horticulture Exposition in China. On the other side, few market participants believe that global iron ore prices will be worse and will drastically drop down as global market is oversupplied.
Majorly, Goa exports low-grade ore to China. In Apr’16, due to higher global iron ore prices persistent throughout the month, Goan iron ore exports touched to a monthly highest level of 2 MnT.
On the other side, iron ore inventories at major producing states have reached at par around 140 MnT in Odisha, Jharkhand and Goa. In Goa, the low-grade ore has no takers among value addition industries and can only be exported. The removal of export duty on low-grade lumps and fines of Fe content below 58%, which is expected to incentivize exports from Goa in FY17.
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