India: Iron ore fines export index falls by $12/t w-o-w in recent deals

India’s iron ore export prices continued to fall further throughout the week starting 6 Aug’21. SteelMint’s weekly export index for low-grade Indian iron ore fines (Fe 57%) decreased by $12/t w-o-w to $57/t FoB east coast India. The index is at an 11-month low, as per data maintained with SteelMint.

India’s iron ore exports market remained dull as Chinese steel mills were cautious in their procurement decisions with wide-ranging production curbs underway.

“Low grade material is difficult to sell at current levels. Heard a few bids at $75/t CFR China levels,” a trader source shared.

An Odisha-based miner concluded deals for around two supramax vessels of iron ore fines (Fe 57%) at around $86/t, CFR China earlier this week. However, prices have fallen further after that.

Another trader source said: “There is no demand for low-grade ore in the market due to high prices. Buyers are waiting for correction in either prices or freight”.

Steel mills in North China’s Hebei province are bracing for intensified curbs on the local steel industry in the winter of 2021-2022 to ensure pure air quality during the Winter Olympic and Paralympic Games.

Rationale:

• Price indicators- No confirmed deal was reported in the current publishing window and hence given 0% weightage under T1 trade.
• SteelMint has received seven (7) indicative prices and offers during the current publishing window, and three (03) were considered for price calculation as T2 inputs, being given a weightage of 100%.

Market highlights:

• Spot iron ore prices fall by around $4 w-o-w: The spot price of iron ore Fe 62% fines decreased by $3.85/t to $166.2/t CFR China on 11 Aug’21. The prices increased by $4/t d-o-d as a few transactions were concluded despite thin liquidity at portside. However, trader sources feel that this will not affect overall sentiments and the market will continue to remain bearish unless spot deals pick up.
• Iron ore stocks down at Chinese ports: Iron ore inventory at major Chinese ports decreased to 128.05 mn t last week as against 128.25 mn t in the previous week, as per data maintained by SteelHome.
  
• Freight rates stable w-o-w: Freight rates for 50,000-55,000 t export vessels from east coast India (Paradip) to China remained stable at $27/t w-o-w. However, 21-28 days’ quarantine and demurrage charges remain matters of pressing concern adding to costs.