Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have came under strong downward pressures, losing $7/mt during the past week to range of $54-55/mt CFR China amid combined forces of correction and a negative medium-term outlook, traders said on Friday, July 3.
"While a correction was much anticipated, the force of the fall has taken the market by surprise," an Orissa-based miner-exporter said.
"The gradual unwinding of over-bought futures positions has resulted in a steady weakening of the physical market. But several reports of international prices falling below the $50/mt mark or even below $47/mt by the third quarter have unnerved sentiments across markets," the miner-exporter said.
"Of course, every fall in offers during the past week has triggered a rise in trading activity and transaction volumes. But this was unlikely to offer much support because the bearish outlook was gaining momentum every day," he added.
Market sources said that, with Indian offers failing to be sustained above the $60/mt mark for the second time in recent months, miner-exporters are expected to withdraw from the export market.
With the cost of mining operations and logistics and transportation costs rising owing to monsoon rains across pitheads, current offer levels would be unattractive for miner-exporters and only traders holding stocks would continue to strike low-volume transactions, the sources added.
According to an Orissa-based trader, there is no definitive indication of stock levels at Chinese ports and higher trading volumes at every fall are likely to ease off and the market does not expect aggressive buying support at the next bottoms.
Buyers' expectations of a sub-$50/mt mark will defer fresh deals, while fears of such a fall would push local traders to pull back offers, further aggravating the bearishness in the market, he added.