Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) increased by $2/mt during the past week to $72.8/mt CFR China, amid volatile market conditions, traders said on Friday, December 15.
“Mid-week dips clearly indicate that there is resistance to higher levels matched by a fall in volumes,” an Odisha-based miner-exporter said. “But offers have bounced back riding on speculative futures trade and the market perception that downside risks would not be below the $70/mt mark,” he added.
“However, the high volatility and the large band within which offers are moving has led to divergent views on mid-term trends,” he said, pointing out that offers lost ground midweek to below the $70/mt mark only to bounce back on the last day of the week.
At least two other traders also said that divergent views of the raw material market are preventing traders representing Chinese steel mills from concluding transactions for larger volumes from the Indian market and, unless offers levels consolidate firmly above the $70/mt mark, volumes will remain low despite fluctuations in either direction.
At the same time, market sources said that optimism over the Indian government scrapping or at least reducing the 30 percent export tax on high grade iron ore lumps and fines is fast receding.
The government after receiving several representations from miners is reportedly against any change in the levy and is siding with steel producers who were opposing any changes in the tax.
The sources said that the continuation of the high export tax impact aggregating traders the most and any fall in offer levels below the $65/mt mark may trigger their exit from the market and only large Indian miner-exporters may then dominate the local market.