Indian export offers of high grade iron ore fines (with Fe content of 63.5 percent and higher) have increased by $2.9/mt to $70.7/mt CFR China, on speculative buying by traders representing Chinese steel mills in response to the futures market although the market started showing signs of cooling down with mid-week high of $71.5/mt failing to hold ground, traders said on Friday, August 10.
“I am not sure whether current high levels will sustain as much of the gains of the week have been on low volumes and speculative buying as futures contracts strengthened during the week. The above $70 per ton mark might not hold but downside risks too will be limited,” an Odisha based miner exporter said.
“The low volume activity in the local market is also since aggregating traders are not holding much iron ore at stockyards near port due to monsoon rains dislocating transportation services. Hence even a slight increase in number of buyers has triggered a surge in offer levels,” he added.
According to two other traders, buyers were reported to have informed that Chinese steel mills are still preferring high grade iron ore lumps or pellets with low alumina content and this will limit upside potential of Indian fines.
“The rally in offer levels seen on two days of the week is already showing signs of settling down. A small correction in the market cannot be ruled out next week,” the traders added.