Wednesday, June 01,
Spot iron ore prices fell further by $ 1/MT on Wednesday with Fe 63.6/63 being quoted at $ 176/MT.
Ample supplies and thin demand from China signal for some more price drop in the near term. But a jump of about $3/MT in forward swaps suggests prices could hit bottom soon and draw buyers back to the physical market.
According to traders in China, “Everybody’s just waiting for prices to hit bottom, but nobody knows where it’s going to be. If the futures market goes up for another one or two days, all steel mills who had been holding back on their purchases might return and start buying again”
On the other hand, Chinese companies are worried over the falling supply of iron ore from India amid growing reluctance in government circles to encourage exports without value addition.
India recently raised export duty from 15% on lumps and 5% on fines to a uniform 20% while Karnataka, a major supplier of high-grade ore, clamped down on exports in its bid to crack down on illegal mining.
Sesa Goa managing director PK Mukherjee said dwindling supplies are causing concern to the company’s Japanese, European and Korean buyers too. And in the process, more stable suppliers such as Australia, Brazil and South Africa and to an extent Russia are reaping the benefits.
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