After a buoyant revival, Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and above) have indicated a correction during the past week, moving down by $1-2/mt to the range of $58-59/mt CFR China, as offers have started to be withdrawn in anticipation of higher prices, traders said on Monday, May 4.
"The level of $60/mt was not sustained as several traders have been pulling back their offers in anticipation of higher prices," an Orissa-based trader said.
"My view is that the revival of the physical market has been driven by higher futures prices and hence the consolidation of the physical market will be short-lived as the futures market has entered an over-bought position," he commented.
"The market has moved up too fast too soon. While offers are unlikely to fall below the $50/mt mark in the medium term, higher levels will face resistance unless restocking by Chinese steel mills gathers pace," the trader added.
Market sources, however, said that the recent turnaround in offer levels have benefitted traders and aggregators who have been able to liquidate significant volumes locked up at port stockyards.
The volatility and uncertainties over the short-term trend constitute a disadvantage for miner-exporters who are facing issues in planning production and have limited holding capacities at pitheads, the sources said.
However, some market sources state that, with stocks at Chinese ports falling fast, traders representing Chinese steel mills will continue to be active in the Indian market. At the same time, volumes of offers are expected to fall in the coming months as the monsoon rainy season sets in from June, impacting mining production, and these two factors would offer support for prices, a few market sources maintained.