Pressures have intensified on Indian export offers for high grade
iron ore fines (with Fe content of 63.5 percent and higher) which have lost $2/mt during the past week to $51-52/mt CFR China, as buyers sharply reduced volumes in the wake of the softening of steel prices, traders said on Friday, May 27.
"Pressures on local offers have persisted for the second consecutive week and domestic
iron ore quotations have fallen below the $50/mt mark, as the market expected, but have recovered towards the end of the week," said an Odisha-based miner-exporter.
"Most traders representing Chinese steel mills said that the latter are attempting to reduce raw material costs as margins from steel products have been getting thinner. Hence, most of our buyers have either stayed away or have only concluded transactions for small volumes during the week," the miner-exporter said.
"Earlier it seemed that $50/mt mark would be the bottom, but market sentiments indicate further a downside risk from current levels," he added.
However, other traders pointed out that local offers have bounced back after falling to levels of $49/mt during the past week and said that this could be an indication that there would be buying support at current levels.
Nevertheless, most market sources concurred that some volatility will continue in the market in the short term since steel prices are yet to consolidate their recent gains and Chinese steel mills will keep their raw material restocking to a minimum in order to reduce costs.