SteelMint: Declining Chinese futures weighs on Indian iron ore export index

The low-grade iron ore export market continues to remain subdued amid soft Chinese demand. Also, the onset of the rainy season and weakening steel margins in China continue to adversely impact demand for low-grade fines, with high-grade iron ore and pellets remaining the preferred choice of steelmakers. SteelMint’s weekly export index for low-grade Indian iron ore fines (Fe 57%) increased marginally by $2/t w-o-w to $87/t FoB east coast India.

“A couple of deals were heard concluded for Fe 57% fines earlier this week at $86-88/t FoB for end-Jul’21 shipments. However, with a sharp decline in DCE iron ore futures today, buying interest of Chinese mills has turned weak. It seems traders are taking positions at the moment”, highlighted a trader source.

Rationale:

• Price indicators- No confirmed deal was reported in this assessment period and given 0% weightage under T1 trade.
• SteelMint has received ten (12) indicative prices and offers during the current publishing window, and seven (07) were considered for price calculation as T2 inputs, being given a weightage of 100%.

Market highlights:

• Iron ore stocks at Chinese ports pick up- Iron ore inventory at major Chinese ports increased by around 2.85 mn t to 127.3 mn t last week compared with 124.45 mn t in the previous week, as per data maintained by SteelHome.

  

• DCE iron ore futures down: China’s iron ore futures market decreased to RMB 1,187.5/t, down against RMB 1,223.5/t assessed yesterday. Thus, a d-o-d drop of around RMB 56 ($8) was observed.
• Freight rates stable w-o-w- Freight rates for 50,000-55,000 t export vessels from east coast India (Paradip) to China are almost stable at $24-25/t. However, 21-28 days’ quarantine and demurrage charges remain a matter of concern adding to costs.
• 100,000 t low-grade fines booked in OMC auction – In today’s OMC iron ore e-auction for Fe 58% from Koira mines, the entire quantity of 100,000 t received bids at INR 4,805-4,855/t against the set base price of INR 4,605/t (ex-mines, including royalty, DMF and NMET).