Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have increased by $1/mt during the past week to $66/mt CFR China, but the underlying pessimism in the market is evident from the fact that mid-week gains tapered off towards the close of the week, traders said on Friday, May 4.
“The cautious mood in the market has been reflected by the fact that even the weekly high of $66.60/mt prompted a hasty retreat by buyers. There is no mood for sustained buying at higher levels as the market direction is not clear in the short term,” an Odisha-based miner-exporter said.
“The short-term trends are more uncertain as current offer levels reflect speculative trading rather than the fundamentals of the physical market,” the miner-exporter added.
Two other traders said that indications received from their counterparts representing Chinese steel mills are that volatility will rise in the short term after the futures exchange in China was opened up for foreign investors for trading in raw material contracts.
They pointed out that over the past few week the iron ore physical market has been reacting to future trades and this is expected to become more closely linked and the short-term trends will be uncertain depending on positions that foreign investors take in the Chinese futures exchange.
Sources in the Indian market said that most of the small-volume transactions have been confined to aggregating traders, while miner-exporters have preferred to wait for the market to settle in the short term before making offers.