Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have staged a sharp recovery during the past week with prices surging up by $7/mt to $92.10/mt CFR China on the back of the revival of activity in the futures markets despite transaction volumes falling at every price rise, traders said on Friday, March 17.
“Offers are moving too fast in either direction. The weekly low of $85/mt attracted strong transaction volumes in the local market, but volumes were seen to fall drastically as offers moved above the $90/mt mark, indicating that buyers are resisting higher levels,” an Odisha-based miner-exporter said.
“Our buyers, namely, the traders representing Chinese steel mills, told us that even activity at ports in China is very dull. Chinese iron ore output during the first two months of the current calendar year has also risen and so restocking by steel mills will remain at a low ebb,” the miner-exporter said.
“Given such fundamentals, I feel higher levels above $90/mt purely driven by the strength of the futures market are unlikely to be sustained in the medium term,” the miner-exporter added.
Two other traders said that there is a lot of talk in the market about the Indian government working on a scheme to cap iron ore prices and this is causing uncertainty among miners. Any move to shift from a free market pricing regime for iron ore to a government-determined price would dramatically change both domestic and export market dynamics for miners, the traders added.