Indian low-grade fines export index up around $8/t w-o-w tracking global price gains

SteelMint’s weekly low-grade Indian iron ore fines (Fe 57%) export index increased by $7.5/t this week and stands at $99/t FoB east coast India. Decline in Chinese iron ore port-side inventories, hike in spot iron ore prices in China and some amount of restocking by mills ahead of spring festival have kept prices supported.

“Some miners are targeting $115-118/t CFR China levels for Fe 57% fines, but considering the discount on Indian low-grade fines, these offers look high”, commented an eastern India-based market participant.

Price indicators – One confirmed trade booked early this week was reported for mid-Jan’21 laycan at $106/t CFR China but it was confirmed by the buyer or seller at the time of publishing hence not considered in price calculation.

SteelMint has received twelve (12) indicative prices and offers during the publishing window, out of which only ten (10) were considered for price calculation as T2 inputs, with an average price of $99/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 –

• Spot iron ore prices in China rise – Chinese spot iron ore fines (Fe 62%) index increased by around $9/t on a weekly basis and stood at $167.95/t CFR China yesterday against $158.9/t a week ago. After a week-long holiday, Chinese market resumed on 4th Jan’21, following which spot prices have increased by around $3.45/t in the last three days.
• Iron ore futures rebound this week – Dalian iron ore futures’ contract of May’21 closed at RMB 1062.5/t today against RMB 996/t last week.
• Iron ore stocks at Chinese ports decreased sharply- Iron ore inventory at major Chinese ports has decreased this week. Iron ore inventories fell sharply by 2.5 mn t to 124.25 mn t as per data maintained by SteelHome.
  
• SteelMint’s assessment for Indian low-grade iron ore fines (Fe 57%) this week stands at INR 3,500-3,800/t (ex-mines, incl. Royalty, DMF and NMET).