Indian Iron Ore Importers Resist Fresh Bookings

Indian iron ore importers are hesitant to book fresh shipments over depreciating Indian currency and reduced iron ore prices in domestic market.

Offers for Kumba lump from South Africa have fallen to USD 68-70/MT, CIF India for shipments to arrive in mid of Sept’15. Last week, the offers were assessed in the range of USD 71-72/MT, CIF India. However, importers have resisted themselves from making fresh bookings. A west India based market participant highlighted that there is around 250,000 MT iron ore lying at port, looking at which importers are utilizing the same material rather than booking fresh shipments.

Spot lump premium, after increasing for 5 consecutive weeks, noticed a fall this week. It has fallen by USD 0.013/dry MT unit W-o-W to USD 0.1375/dry MT unit. It was at USD 0.1505/dry MT unit last week. It is to be noted that spot lump premium incremented by about 63% in past 5 weeks as few steel mills were seen buying high grade lump in order to adhere to the pollution control norms.

With imports becoming costlier and availability increasing in domestic market, importers have turned towards domestic market. Also, recent price cut by Odisha miners have made domestic iron ore further cost-effective. Odisha miners have cut iron ore prices by INR 100-400/MT. Current offers for lump (5-18 mm, Fe 63%) are at INR 3,250/MT (ex-mines) & fines (Fe 63%) are at INR 1,500/MT (ex-mines). Although, notification of DMF (District Mineral Fund) is likely to increase cost pressure on miners. However, considering 30% of royalty as contribution towards DMF, there might not be too much increase in prices post DMF notification.

Talking about iron ore import shipments to India in Aug’15, there are only a handful of shipments seen with no new shipments in queue.

Status of Iron Ore Imports Vessels to India in Aug’15

Qty in MT
N/A: Not Available
Provisional data
Data updated till 19 Aug’15
Source: SteelMint Research, Customs