Chinese spot Iron ore prices have slipped to below USD 80/MT CFR today. Fe 62% fines prices are at USD 79. 8/MT CFR China and Fe 58% offers jump down to USD 59.8/MT CFR China.
Growing supply in contrast to low demand from Chinese steelmakers as well as slowdown in economy are to be largely blamed for the serious turndown in prices, which is at 5 years low.
Spot Iron ore is being preferred by consumers rather than procurement through long term contracts as the former is inexpensive and facing incessant price fall.
Steel mills aren’t accumulating Iron ore as collapse in prices give an impression of watch-and-see to consumers.
Steel production in China that may possibly go beyond 850 MnT this fiscal is attracting huge supplies from world’s leading miners, eventually pressurizing prices. Billet prices in Tangshan have fallen by RMB 30/MT and spot Re-bar by RMB 90/MT.
Export of Iron ore from India is unworkable at this juncture by private companies; government owned MMTC is exporting on behalf of NMDC via long term contracts to Japan & South Korea.
Thus, Iron ore import potential to India is high, supported by exchange rate and falling Chinese prices by USD 36.2/MT since the start of FY15.
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