Chinese Mills Raise Bids for Low Grade Indian Iron Ore Fines

SteelMint in conversation with trade sources learned that Chinese mills have raised bids for low grade iron ore fines. Bids for low grade (Fe 57%) iron ore fines prices have picked up by around 12% W-o-W. The prices have dropped to around USD 56/MT, FoB India or equivalent to USD 66-67/MT, CFR China as against being USD 50/MT, FoB India last week.

However, deals haven't reported at high bids so far. Last deals reported for Fe 57% fines from Odisha were at USD 50-52/MT, FoB India levels.

Why has low grade iron ore prices picked up?

1.Hike in global iron ore (Fe 62%) prices: The global iron ore fines prices (Fe 62%)has increased to USD 95.8/MT CFR China, the prices have hit 5 years high. Sharp rise in high grade iron ore prices have led Chinese mills to hunt for low grade iron ore.. The month of April is marked by highest construction activities in China and also relaxation in production curbs in the country has led to increased preference for lower grade ore in China.

2.Supply disruption indications: The January collapse of mine dam waste in Brazil operational at Vale followed by cyclone in Australia has led to drop in global availability of material. As a result, global iron ore miners have slashed their 2019 estimates leading to material availability crises.

3.Shutting down of domestic mines in China: As per reports received to SteelMint, China's Hebei province this year will shut down 40 mines (other than coal mines) and 51 tailings dams. On March 29, the non-coal mine working conference was held in Shi Jiazhuang, the provincial capital of Hebei province.

High demand for low grade ore from China has turned Indian iron ore exporters active. Many merchant traders and big miners like Rungta and Essel have increased their shipments to east coast. Also, traders like SM Niryat, Bagadiya Brothers, Kashvi Power are booking decent quantities. However logistics remains a constraint for material movement.