Indian export offers for high grade iron ore fines (with Fe content 63.5 percent and higher) have staged a recovery during the past week, gaining about $5/mt to the range of $83-84/mt CFR China, but traders have remained cautious over the sustainability of the rebound, traders said on Tuesday, October 14.
"Sentiments have definitely improved with offer levels bouncing back, but miners and traders have been cautious perceiving the revival to be based more on technicals rather than on change in the fundamentals of the market," an Orissa-based miner-exporter said.
"Iron ore prices had fallen too fast in too short a time. The markets are unsure on the sustainability of the rebound in iron ore prices as the steel price recovery is tentative and is seen only in select product categories. Such conditions are unlikely to trigger sustained restocking by Chinese steel mills," he said. "Hence, exporters are cautious. As for miner-exporters, volatility is always bad for production and logistics planning, as any sharp fall may result in a pile-up of stocks," he added.
Market sources said that Indian offers have showed gains largely on the back of gains in the iron ore futures market, even though physical trading remained weak, indicating that the revival still lacks stability.
A trader said that reports received in India indicate that iron ore imports into China during September were up 14 percent, but, if steel prices do not show a revival, Chinese mills will have no reason to restock in the short term and so current iron ore offers could move either way.