Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have failed to hold onto mid-week gains, declining by $4.30/mt week on week to $59/mt CFR China reacting to the sharp downturn in the futures market and the negative outlook for most key drivers of finished steel, traders said on Friday, May 5.
“Mild expectations of a revival when local offers touched a mid-week high of $66/mt were nipped in the bud by the subsequent flood of negatives like the fall in futures prices and reports that Chinese steel mills were selling raw material cargoes,” an Odisha-based trader said.
“Reports of Chinese mills selling raw material cargoes indicated that they had no appetite and that fresh bookings would not be forthcoming in the Indian market in the short term. All key drivers are negative now that Indian iron ore offers have indicated declines for the fifth consecutive week,” the trader added.
At least two aggregating traders said that they failed to conclude any significant transactions for the past four weeks as buyers are not responding and are expecting offers to maintain their downward momentum.
According to the traders, with Indian offers having dropped below the $60/mt mark on the last day of week, the market expects the downward trend to continue, with offers losing another $2-4/mt as the next bottom.
The traders said that most Chinese steel mills are able to source iron ore from existing port stocks at substantial discounts and so they are under no compulsion to make fresh overseas bookings, resulting in negligible activity in the Indian market even as offers move lower.