Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have increased by $1.40/mt during the past week to $64.60/mt CFR China, even though nervousness has persisted in the market over the outlook for finished steel prices and the slowdown in raw material off-take by Chinese steel mills, traders said on Friday, April 13.
“Offers did recover much of their mid-week losses, but this was amid such low volumes that few are sure of the recovery consolidating,” an Odisha-based miner-exporter said.
“Chinese finished steel prices are moving in both directions. There have been reports of a fall in Chinese iron ore imports during March. These two factors are negatively impacting the raw materials market,” the miner-exporter said.
According to two other traders, Chinese steel mills have also been increasing their use of low grade iron ore fines and hence the low transaction volumes in the Indian market.
Much of the recovery in iron ore offers during the past week was triggered by the recovery of finished steel and iron ore futures prices, and the impact on the physical market could be short-lived, the traders said.
On the supply side, most of the mines in the eastern Indian state of Odisha are reportedly now working at full capacity and aggregating traders too have built up large stocks at port stockyards in view of thin export trading volumes over the past several weeks, market sources said.
With more mines coming back into production in Odisha, the impact of mines being forced to close down in Goa in the west has largely been offset, the sources said, adding that in any case over the past several months there have been virtually no buyers for low grade iron ore fines, the predominant production of the Goa mines.
Only a consolidation of prices at higher levels would lead to a stock drawdown and bring supply-side stability to the market, the sources added.