Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have staged a sharp rally , surging by $8/mt during the past week to $65/mt CFR China on the back of a sharp revival of restocking by Chinese steel mills, traders said on Friday, June 30.
Even though Indian offers had been creeping up over the recent few weeks, the size of the rise has taken most in the market by surprise. Both the number of transactions and the volumes concluded by traders representing Chinese steel mills have increased significantly during the past week,” an Odisha-based miner-exporter said.
“A combination of strengthening of finished steel prices and a fall in ports stocks in China is said to have caused Chinese steel mills to look at overseas stocks,” the miner-exporter said.
“However, I am still cautious about predicting that the current surge in offers is an indication that the market is breaking out of its bear phase. For that to happen, I would like to see local offers being sustained and consolidating above the $60/mt mark over the medium term,” he added.
At least two other traders said such a high level of transaction activity in the market has not been seen in the last several months.
But they added that market conditions next week will be an indication of the sustainability of current offer levels as the market can either come under pressure for a correction as offers have moved up too fast, or the market may receive further support with buyers becoming more active in anticipation of a further rise in offers.
In India, the relatively low volumes available to aggregating traders in view of the monsoon rains can offer supply-side support to offers if transaction volumes are sustained at current levels, the two traders added.