Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have lost momentum during the past week and moved in a narrow range, marginally softening by $0.40/mt to $83.45/mt CFR China as Chinese steel mills have become cautious due to rising raw material costs and divergent views on supply disruptions, traders said on Friday.
“Traders representing Chinese steel mills tell us that they are concerned over the surge in iron ore prices. There is also a general feeling in the market that the supply disruption in the wake of the Vale tailings dam disaster might be contained and hence buyers are either postponing fresh bookings or reducing contract volumes,” an Odisha-based miner-exporter said.
“At the local level, aggregating traders have also built up high stockyard inventories during the buying lull at the beginning of the current year and the high availability is also dampening sentiment,” the miner-exporter added.
Market sources estimated that, in Odisha alone, aggregating traders are holding around 60,000-80,000 metric tons of stocks built up over the past one and a half months.
According to two other traders, the narrow movement and fall in volumes seen over the past week could be the precursor of a correction setting in and of offers seeking a new bottom at around $80/mt in the medium term.
The traders said that much of the short-term trend hinges on the assessment of the magnitude of supply disruptions emerging as market participants are still differing on this.