Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and above) have increased by $2/mt over the past week to the range of $61-62/mt CFR China, but nervousness regarding a possible impending correction has surfaced in the market, traders said on Friday.
"The market is apprehensive of a correction as the physical market is largely being driven by gains in futures and higher levels are facing resistance," an Orissa-based miner-exporter said.
"The upturn has definitely led to improved sentiments but transaction volumes have continued to be on the low side since buyers are retreating at every rise, indicating resistance and a correction round the corner," the trader said.
"Traders and aggregators have been the beneficiaries of the upturn rather than miners. Port stocks have also fallen. But with restocking by Chinese steel mills still being limited, current offers have hit the upside potential," he added.
According to a second miner-exporter, the recent upturn has been triggered by some disruption of supplies of Australian cargoes and resulting strong offers from Chinese traders, but the physical markets will lose ground as such disruptions are temporary.
At the same time, not all global miners are indicating cuts in supplies with some like Rio Tinto reported to have ruled out any reduction in shipments, he added.
Local market sources said that transaction volumes by Indian exporters will continue to remain low because increases of $15-20/mt from current levels would offset the higher taxes and levies imposed on miners. Since such gains are ruled out even in the long term, transaction volumes of 30,000-40,000 mt are a distant possibility, the source added.