Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have gained $5/mt during the past week to $55-56/mt CFR China with transaction volumes rising significantly even though caution has surfaced towards the end of the week amid doubts over the sustainability of the upward movement, traders said on Friday, July 1.
“The market was caught by surprise by the sudden gains in offers and most aggregating traders were able to conclude transactions for significant volumes,” an Odisha-based miner-exporter said.
“Gains in international billet prices and strong positions in the futures market were driving traders representing Chinese steel mills to increase their activity in the Indian market,” the miner-exporter added.
“However, towards the close of the week perceptible caution has surfaced with the number of active buyers in the market falling. My personal belief is that, without fundamental strengths in steel prices, higher levels will not be sustained and a correction is inevitable,” he added.
At least two traders said that they expected a slowdown in the market movement as the restocking appetite of Chinese steel mills is not strong enough to sustain the rally and a $2-4/mt downside risk is possible in the short term.
However, another section of market sources said that supplies in the local market are expected to become tight as miners cut back production during the monsoon season as indicated by five percent lower iron ore production in Odisha in May this year. And this would limit the downside risks to Indian export offers, the sources added.