Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have surged during the past week, moving up $7.50/mt to $80.85/mt CFR China, as developments in Brazil and Chinese holidays ahead triggered a rush among traders representing Chinese steel mills to conclude high volume transactions, traders said on Friday, February 1.
“Indian high alumina content iron ore fines had been losing preference among most buyers since the past several months. But developments like the tailing dam breach in Brazil, lower production from Vale and expected raw material supply disruptions just ahead of Chinese holidays seems to have put high alumina Indian iron ore fines back on the shopping list of buyers,” an Odisha based miner-exporter said.
“The fact that offers moved up breaching the $80 per ton mark in just two trading days indicating the sharp rise in volume and even number of transactions concluded in the local market. But it is still too early to definitively say if developments in Brazil will enable Indian exporters to push higher volumes of iron ore fines overseas on a sustainable basis because of severe logistical limitations faced by local exporters—merchant and miners,” he added.
An steel sector analyst with a Mumbai based financial services advisory firm said that Indian raw material exporters would be hamstrung in driving higher volumes in the short term even with rising demand, as miner-exporters were not equipped to change production parameters quickly nor ramp up logistic capacities even assuming there was a global shift in demand towards Indian markets.
However, miners like Vale can respond faster to compensate loss in production in one region with ramping up capacities elsewhere and the global disruptions would be limited the analyst said however adding that Indian exporters could still benefit from short term fallout of higher volume shipments for few weeks.