Recent sharp decline in spot iron ore prices in China has turned Indian iron ore exporters silent. Iron ore fines (Fe 62%) index in China dropped further yesterday (i.e. 10 Apr’17) and closed at USD 73/MT, CFR China. Prices have lowered by USD 6/MT W-o-W.
Reasons behind recent decline in prices can be attributed to the below facts:
1. Decline in iron ore & steel futures in China pulled down prices in physical market as well.
2. Prices of semi-finished and finished steel products observed a correction
3. Steel mills remained inactive from restocking iron ore cargoes
Buying interest of low-grade Indian iron ore fines remains weak – Decline in iron ore prices in China has weakened the buying interest of Chinese buyers as well. As per market sources report to SteelMint, Indian iron ore exporters are facing a tough time presently as trade activities are very low. Low grade Indian iron ore fines (Fe 57%) is presently trading at discount of 42%. Hence export offers of Indian iron ore fines (Fe 57%) will stand at USD 29-30/MT, FoB India.
Quality issues in Indian iron ore continues to remain a matter of concern for the Chinese buyers. Chinese government has already announced steel capacity cuts to curb air pollution. China’s Hebei province had launched a steel production probe in Mar’17 over failure in implementing pollution rules and aims to shut 15.6 MnT in 2017. Many small factories have been shut down owing to pollution control measures.
Thus steel mills are looking forward to usage of high grade iron ore, which in turn has reduced buying interest of low grade Indian origin iron ore fines.
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