Indian export offers for high grade iron ore fines with Fe content of 63.5 percent and higher have suffered one of their worst setbacks in recent years, dropping by $12/mt during the past week to the range of $105-106/mt CFR China, as buyers have retreated from the market and as no significant volumes have been transacted amid sentiments of panic, traders said on Tuesday, March 11.
"There is complete turmoil in the local markets. Persistent negative sentiments have turned into panic in the local market during the week," an Orissa-based miner-exporter said.
"Offers which crashed to recent lows also did not evoke any buying interest. Traders representing Chinese steel mills were completely absent during the week and local exporters were left in the lurch," the miner-exporter said.
Market sources said that buyers had all pulled back, resulting in one of the worst losses of $8/mt in a single day in response to reports of Chinese commodity markets getting into a tailspin.
According to reports, a number of traders active in the Indian markets have been adversely affected since Chinese steel mills have defaulted in making payments for iron ore fines bookings made earlier, the sources said.
Under these circumstances, faced with a liquidity crisis, buyers in Indian markets have retreated, not willing to risk concluding fresh deals, the sources added.
Two analysts contacted by SteelOrbis said that the sharpest single-day fall in the last four years was an indication that local offers now had a downside risk of falling below the $100/mt mark in the medium term unless the commodity markets in China return to normal in the short term.
Chinese steel mills are aware that iron ore fines inventories at port stockyards are still high and they will wait for offers to complete their downward cycle before placing fresh orders with traders, and this will put further short-term pressures on local offers in the Indian market, the analysts added.