Indian export offers for high grade iron ore fines (Fe content of 63.5 percent and above) have plunged during the past week, shedding $7-8/mt and falling to levels of $125-126/mt CFR China due to huge pressure mounted by Chinese buyers, traders said on Monday, May 20.
"For the past one month, pressures have been built up by traders representing Chinese steel mills to bring down iron ore fines prices below the $130/mt mark," an Orissa-based miner-exporter said.
"With Chinese mainland steel prices softening steadily, steel mills there have been aggressive in mounting pressure to reduce raw material prices. However, unlike early in the month when Indian traders resisted lower prices by reducing booking volumes, exporters have been forced to book higher volumes in the past week, even after the sharp fall in prices, to maintain market presence," the miner-exporter said.
However, some market sources said that, with Australian ore being offered at $124-125/mt CFR China, Indian traders stood no chance of resisting downward pressure from Chinese traders without risking a complete exit from the markets.
The sources said that the near crash in prices was much anticipated owing to a combination of bearish pressures like oversupply from Australian mines, steady downward movement of billet prices, and the ore inventories already accumulated by Indian traders which they have been unable to hold at ports.
According to traders in the eastern Indian province of Orissa, barring an upward correction of a few dollars per metric ton in prices, Indian fines will continue to head towards the next lower target pricing levels of $120-122/mt.