Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have surged by $3.10/mt week on week to $83.85/mt CFR China amid volatile market conditions with traders increasing activity in physical markets for higher-volumes contract early in the week even as uncertainties over the impact of supplies from Vale have continued to impact market conditions, traders said on Friday, February 15.
Market sources said that there have been a lot of unconfirmed reports received from their buyers that Vale could declare a force majeure following its tailings dam disaster and this has triggered some panic buying by traders, resulting in the initial surge in offers.
However, sources said that, with no confirmation available on how big the supply disruptions would be, market conditions have eased towards the end of the week and Chinese steel mills have become cautious about making bookings at current high levels, with traders representing these mills sharply reducing bookings on the last day of the week.
“The impact of possible supply disruptions from Vale is yet to be definitively gauged by the market and this has been reflected in the high volatility seen in the market with offers surging by over $5/mt on a single trading day only to fall back the next day,” an Odisha-based miner-exporter said.
“However, a fall-out of global supply uncertainties has been that buyers have been once again showing interest in high alumina-content Indian iron ore fines which had fallen out of favor of Chinese steel mills a few months ago. This has changed the trend, resulting in a sharp spike in average contract volumes, but there are still doubts surrounding the sustainability of offers above the $80/mt mark in the medium term,” the miner-exporter added.