Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have increased by $1.10/mt week on week to $65.60/mt CFR China, riding on a slight recovery of futures contracts, but transaction volumes and the outlook have remained depressed in the local market, traders said on Friday, July 20.
“ I would not put too much weightage on the marginal recovery in offer levels as this has come amid very low transaction volumes,” an Odisha-based miner-exporter said.
“We learn from our buyers that Chinese steel mills are sourcing raw material from port stocks and even for restocking continue to prefer high grade low alumina-content Brazilian ore over Indian fines in view of stricter emission norms in China,” the miner-exporter said.
“There is no definitive trend in offer levels right now, while for the next two months production at mines will be reduced during the current monsoon season. The low volume activity in the market will be a cause of concern thereafter,” he added.
According to a steel sector analyst with a Mumbai-based financial services firm, the full downside risk to steel raw material is yet to emerge.
The analyst said that the full impact of the trade war between US and its trading partners is still to be felt and it may result in surplus production in China and other countries, impacting profitability of steel producers and having a depressing impact on raw material prices.