Iron ore: China expects a supply surge soon; India’s contribution still uncertain

Wednesday, April 27,

Spot iron ore prices remain firm but demand seems to be moderate as the aggression associated with rising iron ore market is missing.Exporters quote Fe 63.5/63 at $189-190/MT i.e. up by $1-2/MT from the Tuesday..*

Supply of ore from India seems to be demographic:

Karnataka, one of the major suppliers of Indian ore is likely to issue supply export permits by 1^st week of May. Also, India’s largest iron ore exporter, Sesa Goa expects its sales volume to jump by 15 to 20% this year after the Supreme Court lifted the ban on iron ore exports from Karnataka. So, all these factors hint for a rise in supply from Karnataka this fiscal.

However, supply from Goa & Orissa, other major suppliers of Indian ore, are expected to be low due to factors such as Monsoon & tighter transport permits from mining authorities. Higher freight rates & a hike in export duty announced in the recent Budget are among other factors that might curb the exports and reduce India’s contribution in the International market.

China expects to see a supply surge soon:

Strike by truck drivers at the Shanghai port, the busiest container port in China comes to an end. The strike, which began on last Wednesday, had disrupted shipments at the port. So, now with things back to normal, movement of goods are expected to improve.

Baosteel Group, on the China’s top steel maker believes the Global supply and demand conditions for iron ore to reverse sooner.

According to Baosteel Group chairman Xu Lejiang “In the last decade, iron ore has turned into a crazy stone from an ordinary stone. The current cycle seems to come to an end and the massive investment over the past 10 years would soon translate into an iron ore supply surge”