Indian iron ore fines export offers soften amid signs of cooling down in reaction to possible output cuts by Chinese mills

Friday, 26 July 2019 17:56:58 (GMT+3)   |   Kolkata
       

Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have lost $3.90/mt week on week to $112.06/mt CFR China as the market started showing signs of cooling down triggered by reports of possible production cuts by Chinese steel mills, higher exportable volumes in the local market, and the softening of futures contracts, traders said on Friday, July 27.

“The market has almost become reconciled to and factored in medium-term raw material shortages and lower supplies from the major global suppliers. But reports of production cut impositions on Chinese steel mills have added a new dynamic and portents of lower raw material demand. Both these factors have contributed to high market volatility and offers trending lower as traders representing Chinese steel mills have reduced contract volumes during the past week,” an Odisha-based miner-exporter said.

“In the local Indian market, the anticipated fall in production and the drawdown in exportable volumes have not been very sharp as the monsoon rains have not been widespread across the mining belt. Both aggregating traders and miners have sufficient volumes in stock and this too has contributed to the softening of offers,” the miner-exporter added.

However, two large traders expressing a contrarian view have maintained that the market will continue to have an upward bias largely because the supply-side tightening will continue to provide support for offer levels.

They pointed out that this is vindicated by offers bouncing back after the large mid-week low and, even though average contract volumes have fallen, they will pick up because a section of the market feels that fears of production cuts to be imposed on Chinese steel mills might be exaggerated and the sharp mid-week losses are a reflection of such sentiments.

 


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