Pressures have continued to mount on Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher), which have dropped below the $50/mt mark during the past week, softening by $2/mt week on week to $49-50/mt CFR China, amid weak steel prices and increased caution on the part of steel mills as regards restocking of raw materials, traders said on Friday, June 3.
“Several traders representing Chinese steel mills have told us that the latter are unwilling to restock amid falling prices and reduced margins for steel,” an Odisha-based miner-exporter said.
“We have also learned from such traders that Chinese steel mills are securing iron ore from sufficient port stocks and this has resulted in negligible fresh transactions in the Indian market,” the miner-exporter said.
“Although towards the close of the past week, offers have bounced back from a weekly low of $48/mt to touch the $50/mt mark, the outlook continues to remain negative,” he added.
Despite the $1/mt gain toward the end of the week, market sources said that Indian export offer levels could well test the next bottom of $45/mt as Chinese steel mills are heading for depressed market conditions and a slowdown in consumption levels.
Under these circumstances, local traders and miners are not expecting any rise in the volume of fresh bookings, the sources said.
At the same time, with monsoon rains expected to hit most parts of India over the next few weeks, several aggregating traders have reduced their activity ahead of the usual seasonal flooding of stockyards and problems of transportation logistics, traders said.