Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have continued to surge for the second consecutive week gaining $4.90/mt week on week to $89.05/mt CFR China as fears of supply disruptions exceeded market expectations, triggering renewed large-volume buying interest of high alumina-content Indian fines, traders said on Friday, April 5.
While the shortfall in supplies from Vale following its tailing dam disaster had been plaguing sentiments, new reports of lower supplies from Rio Tinto and BHP Billiton due to the impact of cyclonic weather condition in Australia have further fueled fears of a worsening of supplies in the current year, the traders said.
A steel sector analyst with a Mumbai-based financial services firm said that, according to a quick review based on reports received in India, a conservative estimate of the fall in supplies from leading global miners is around at least 33 million metric tons over the next few months.
“There are going to be sharp changes in supply dynamics in the physical market, which will likely be sustained through the year. This long-term impact will overcome minor corrections in offer levels and I see the supply-side tightening continuing to boost offers and Indian miners are stepping up production of even low grade fines anticipating a rise in demand for volumes in the local market,” an Odisha-based miner-exporter said.
“It is only a matter of time before offer levels will consolidate above the $90/mt mark. Over the past few weeks, there has been a sharp revival of buyers’ interest for high alumina Indian fines and traders representing Chinese steel mills increased average volume contracts by a big margin during the past week,” the miner-exporter said, adding that the extended weekend in China would lead to a pause in activity, but he discounted the possibility of a big correction.