Despite rising iron ore prices in Chinese spot market, Indian iron ore exporters are finding it tough to sell their cargoes.
Market participants see several reasons for this, out of which one is, high margins made by steel makers. Local sources mention, that Chinese mills do not want to divert from regular cargoes to unconventional cargoes. Mills just want to optimize their production and do not want to lose on high prices.
“Chinese steel prices have increased sharply in last few months. Steel mills are making handsome profits. No one wants to miss this rally by experimenting with irregular and low grade cargoes.” Said a local trader based in China.
Another reason is, rise in increase of scrap usage by Chinese mills. It is reported that Chinese mills have increased their scrap consumption in last few months due to displaced quantity available in domestic market since small induction furnaces are closed.
Currently no fresh deals have been heard for Indian cargoes but price indication for 57/58 Indian iron ore fines is around 41 to 42/MT, CFR China, which is equivalent to USD 32 to 33/MT FOB India for Sept delivery. These prices are at discount value of 38-40 % as compared to $74/MT CFR China for 62% Fe Australian fines for regular cargoes. The Chinese buyers are expecting a discount of 38-40% where as Indian suppliers are expecting it to be around 36-37%.
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