Indian export offers for high grade iron ore fines (with Fe content of 63.5% and above) have slumped by $4.10/mt to $97.25/mt CFR China in the past week as a strong correction set into the market triggered by a fall in values of future contracts and Chinese steel mills becoming cautious over restocking high-priced raw materials, traders said on Friday, May 31.
“A correction was much anticipated in the market after offers breached the $100/mt mark earlier in the week. The steady unwinding of futures contracts at higher levels triggered the correction, while a section of buyers has maintained that Chinese steel mills are being cautious about restocking large volumes as the current high prices would impact margins of finished steel,” an Odisha-based miner-exporter said.
“But I think iron ore fines prices still have a lot of resilience and the correction will run its course in the short term. The downside risks in the short term should not be below $95/mt mark and offers should bounce back because uncertainties surrounding supplies will continue to persist,” the miner-exporter added.
According to two eastern-India based traders, a positive sign even amidst the correction is that, even though average contract volumes fell during the past week, buyers’ preference for high alumina-content Indian fines has been sustained during the week as global supplies continued to remain tight.
The traders said that, after sustained three consecutive weeks of increases, the cooling down of the market is normal with a lot of speculative futures contracts being unwound, but the fundamentals of the market will still be determined by the tightening of supplies from major global miners.