Indian low-grade fines export index falls marginally on rising Chinese port stocks

SteelMint’s weekly low-grade iron ore fines (Fe 58/57%) FoB India index fell marginally by around $1/t this week. Index stands at $76/t FoB against last index of $77/t FoB east coast India. However, amid increasing Chinese port stocks, new bookings have slowed down in anticipation of price correction, SteelMint learned from traders.

Price indicators – Trade sources reported an export deal to have concluded for Fe 57% fines by an Odisha based miner at $87-88/t CFR China (equivalent to $76-77/t FoB India). The deal was concluded early this week for Nov’20 shipment. This has been taken into consideration for price calculation as T1 inputs.

SteelMint has received three indicative prices and offers during the publishing window. All inputs were considered for price calculation as T2 inputs, with an average price of $75/t FoB India.

Rationale: The index has been calculated using an average of T1 and T2 price inputs. Transactions confirmed by either a buyer/seller are designated as T1 input while bids, offers, and indicative prices are designated as T2 inputs. Both T1 and T2 categories of inputs carry 50% weightage each in price calculation for FOB price assessment.

Market highlights –

• Chinese spot iron ore fines (Fe 62%) fell by around $3/t on weekly basis and stood at $ 116.95/t CFR China yesterday against $119.75/t a week before. However, on a daily basis, the price was up by $1.25/t yesterday.
• Iron ore inventory at major Chinese ports increased in this week further by 1.15 mn t to 128.95 mn t against 127.8 mn t a week ago.
• However, as per SteelMint sources, traders are booking future cargoes but at current scenario buyers are slightly reluctant to purchase at high prices. Steel mills and traders buying ore from port side stocks. However, Indian iron ore is still in demand as it is considered a good ingredient to reduce the operating cost of mills in China.
• DCE most traded iron ore futures on Jan’21 contract fell by RMB 6 to RMB 779.5/t d-o-d.
• India’s domestic iron ore fines (Fe 57%) price in Odisha is heard to be around INR 1,800-1,850/t ex-mines (incld. Royalty).