Indian export offers for high grade
iron ore fines (with Fe content of 63.5 percent and higher) have dropped below the psychological barrier of $50/mt, losing $3/mt during the past week to around $48-49/mt CFR China amid the negative outlook on steel prices and buyers' liquidity problems, traders said on Friday, October 30.
"Sentiment has dipped sharply during the past few days. The outlook for finished steel prices has become more negative and Chinese steel mills are unwilling to conclude fresh raw material transactions, avoiding inventory buildups," an Orissa-based miner-exporter said.
"Market reports have indicated that a few traders representing Chinese steel mills are facing liquidity issues. Despite offers falling below the $50/mt mark, no significant transactions have been reported in the market as few are sure of the next bottom," the miner-exporter said.
"The market has been rife with talk of $40/mt being the next bottom before the New Year. And while some have discounted such a possibility, most market participants state that offers have yet to hit the bottom and still hold downside risks even from current levels," he added.
Market sources said that the Indian market has also taken note of reports published by a few research firms warning of drastic problems imminent for Chinese steel mills and even of the possibility of a few of them closing down.
Market sources said that local offers are also being impacted by oversupply particularly from miners in Goa which are increasing their output and shipments after reopening mines over the past two months.
The sources said that Vedanta has announced shipments of at least 5 million mt during the current fiscal year from its Goa mines, while Fomento Resources has also stepped up shipments from its Goa mines.
Even though exports from Goa have all been for low grade
iron ore fines by miners, the higher volumes entering the market have nudged out aggregating traders operating around the eastern province of Odisha and this has further impacted sentiments, the sources added.