Bids for low-grade iron ore fines from India continued to remain low despite the global price rally. SteelMint’s weekly export index for low-grade Indian iron ore fines (Fe 57%) inched up $1/t to $30/t FOB east coast India, stable w-o-w.
The continued dull demand has kept trades muted as the Indian sellers were heard having a target of around $45-50/t FOB. However, interest from Chinese buyers remain muted at these levels, traders highlighted.
The spot price of benchmark iron ore Fe 62% fines increased w-o-w on rising steel margins to $107/t CFR China as against $100.1/t a week ago. However, demand continues to slide.
China’s trading activities remained muted amid weak demand and buyers secured cargoes from the port market in small parcels. Import losses were seen in most of the iron ore fines, which has further dented seaborne demand.
Chinese iron ore stocks have accumulated for 10 consecutive weeks into a very high level which has forced major miners to control their production. Iron ore inventory at major Chinese ports increased to 155.4 mn t last week as against around 130 mn t towards end-Sept, as per data maintained by SteelHome. Also, on w-o-w basis, inventory picked up by 4.5 mn t last week.
As per SteelMint data, total iron ore exports from Indian ports for the week (28-4 Dec) continue to remain nil for the second consecutive week.
Rationale:
- Price indicators: No confirmed deal was reported in the current publishing window and hence given 0% weightage under T1 trade.
- SteelMint received six (6) indicative prices, bids and offers during the current publishing window, and four (4) were considered for price calculation as T2 inputs, given weightage of 100%.
Market highlights:
- DCE iron ore futures down: DCE iron ore futures’ May’22 contract closed at RMB 642.5/t ($100.8), down RMB 16/t d-o-d.
- Freight rates inch up w-o-w: Freight rates for 50,000-55,000 t export vessels from India’s east coast (Paradip) to China have increased by $1/t to $19/t this week.
- SAIL iron ore e-auction fails to attract bids: SAIL conducted an auction for 80,000 t of iron ore tailings (Fe 59.8%-indicative) from the Barsua iron ore mines on 3 Dec’21, with the base price set at INR 3,500/t FOR (ex-mines, including royalty, taxes, and additional premium). The tender failed to fetch any response due to bid-offer disparity.
- OMC fines and lump auction receive tepid response: OMC had scheduled an e-auction for iron ore fines and lumps on 3 Dec’21. Out of the total 800,000 t of lump put to auction, only 52% (417,000 t) received bids. The majority of the lots received flat bids i.e. in line with the base price except those of Guali and Jiling which registered hike in bids by up to INR 2,100/t. Out of the total 1.18 mn t of iron ore fines put to auction, only 15% (166,000 t) received bids. The auction received flat bids i.e. in line with the base price.
- JSW Steel to auction 300,000 t fines – JSW Steel has scheduled an auction for 300,200 t of iron ore fines (Fe 54-56%) on 13 Dec’21. The material is from the company’s Jajang mine in Odisha’s Keonjhar district. The floor price for the auction has been set at INR 300/t ex-mines.
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