Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have gained $1/mt during the past week to $76.5/mt CFR China, though prices have softened from the mid-week high of around $80/mt amid volatile market conditions, traders said on Friday, November 18.
“Clearly the market is overheated with strong plus positions in futures driving the physical market,” an Odisha-based miner-exporter said.
“Even though strong sentiments regarding finished steel prices are positive for raw materials, the surge in Indian iron ore offers has caught most market participant by surprise. The surge has been so strong that now there is uncertainty over its sustainability, with offers starting to fall back from the two-year high” the miner-exporter added.
Market sources said that there has been aggressive restocking by traders representing Chinese steel mills and the average transaction volumes are up with several lots of around 30,000 mt being reported during the past week.
However, two traders said that, despite the current bullish sentiments in the market, Indian iron ore offers may go in either direction in the short term.
On the one hand, the continued strengthening of finished steel prices may offer sustained support for raw material prices. But, on the other hand, due to the Indian government’s decision to ban high value currency notes as legal tender, resulting in 86 percent of cash liquidity being sucked out of the economy, all commodity markets have been pushed into unknown territory, the two traders said.