Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have increased by $1.80/mt week on week to $66.40/mt CFR China, but doubts over the sustainability of higher levels persisted as strong mid-week gains failed to hold, traders said on Friday, April 20.
“The uptrend in offer levels was largely driven by futures market speculation and bargain hunting at low levels. This impacted the physical market but the fundamentals are still weak as the mid-week high of a shade over $67/mt fell back towards the close of the week,” an Odisha-based miner-exporter said.
“In the absence of strong restocking by Chinese steel mills, offer levels are unlikely to consolidate purely on the back of future trading movements,” the miner-exporter added.
According to two other sources, traders representing Chinese steel mills were active early in the week at offer levels around $64/mt but soon retreated as prices moved higher and there were reports of some transactions being cancelled by the close of the week.
The two sources said that most trading activity has been restricted to Indian aggregating traders as miner-exporters have been unwilling to conclude transactions as there has been no stability in the market.
“The market is keeping a close watch on the medium term. Reports that Chinese domestic iron ore output has fallen in the first quarter and a few global resource majors forecasting lower output might impact offer levels in the medium term,” an Odisha-based trader said.
“However, the appetite for raw materials will be determined by output levels and finished steel prices of Chinese steel mills, which are still in a grey area,” he added.