Falling global iron ore prices has dented sentiments for Indian iron ore & pellet exporters. Lesser realizations in exports has started weighing down domestic iron ore & pellet offers. Thus, SteelMint has tried to analyze the factors that may result in iron ore price reduction by NMDC for next month deliveries.
C.G. based units sharply reduced iron ore sourcing from NMDC in Apr’17 – Chhattisgarh based units sourced 67 rakes of iron ore from NMDC which has fallen sharply this month. Till 26 Apr’17, they have procured only 19 rakes.
However procurement of iron ore from NMDC by outside state based units increased in Apr’17 (till 26th) to 240 rakes against 217 rakes in Mar’17. Till 26 Apr’17, JSW Steel has procured 58 rakes against 21 rakes in Mar’17. Vizag Steel also raised iron ore sourcing from 126 rakes in Mar’17 to 142 rakes in Apr’17 (till 26th).
NMDC’s iron ore sales in Karnataka e-auctions increased in Apr’17 – So far in Apr’17 (till e-auctions conducted in 25 Apr’17) NMDC sold 1.17 MnT iron ore via Karnataka e-auctions compared to 1.07 MnT in previous month.
Movement for iron ore exports witness fall – NMDC loaded 37 rakes for export purpose in Apr’17 (till 26 Apr’17) against 74 rakes in previous month. On the other hand, Odisha based miners and east-India based parties have also reduced movement for exports. In Mar’17, 1.48 MnT iron ore was exported from east coast based ports namely Paradip, Vizag, Dhamra, Haldia and Gangavaram. The figure has reduced to half to 0.74 MnT in Apr’17 (till date).
Low parity in exports owing to falling global prices – Spot iron ore prices in China have been witnessing down trend since beginning of this month. On 03 Apr’17, Fe 62% fines index was recorded at USD 79/MT, CFR China which has come down and is presently seen at USD 67/MT, CFR China. Declining iron ore prices in China and widening discounts on low grade Indian iron ore fines continues to keep Indian exporters away from the market.
Presently low-grade Indian iron ore fines is trading at a discount of 41% and for Fe 57% fines export price is at USD 26-27/MT, FoB India.
Cheaper imports of iron ore – Falling global prices has turned offers for lump imports to India cheaper. Gujarat based steel makers have already been heard to book a vessel of around 90,000 MT and few other steel makers are also looking up for booking more shipments for Jun’17 deliveries.
Appreciating Indian currency has also supported Indian importers. INR is trading at 64.14 against USD. A month back it was trading at 65 against USD.
Domestic pellet prices under pressure – Amid lesser realizations in exports, major Indian pellet exporters have made their way to domestic market. Increased pellet availability in domestic market has put domestic pellet prices under pressure. Export prices for Indian pellets have narrowed to USD 72-73/MT, FoB India. Whereas, pellet prices in Barbil have fallen by INR 500/MT M-o-M and in Durgapur and Raipur they have crashed by INR 550/MT and INR 400/MT M-o-M respectively.
Falling sponge offers – Limited trade inquiries and falling prices of domestic scrap have resulted in fall in sponge offers. C-DRI prices in eastern India are down by INR 500/MT M-o-M, in central India they are down by INR 1,200/MT M-o-M and in Southern India they have come down by INR 1,000/MT M-o-M.
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