happy new year to all, some more good news coming out of india.Wednesday, 06 Jan 2010
Iron ore market is on a resounding run in opening week of 2010. The upturn which commenced on 11th December 2009 has accelerated with each passing day. The perception of shortage has led to an explosion thus amazing everybody.
It is learnt that current levels are for 63.5/63% iron ore fines is prevailing at USD 132 per tonne CFR Main Chinese port or USD 100 per tonne FOB Indian port.
The sprint was triggered by a combined effect of several factors
1. In the run to the Lunar Holidays, Chinese mills and traders have been anxious to amass stocks of iron ore to match surge in Chinese steel production
2. The situation is compounded by decrease in stockpile of imported iron ore at Chinese ports, which are currently at typically low level of about 66 million tonnes as against average of about 70 million tonnes during most of 2009.
3. The tug of war between mining majors from Australia and Brazil and Chinese buyers over settlement of contractual price is intensifying, with analysts and bank forecasting bigger hike.
4. Force majeure factors of state clamp down on illegal mines in the power houses of Karnataka and Orissa has also unleashed hike in domestic and export levels from India
5. The recent revival of 5% export duty by the government of India on Iron ore fines Fe 63.5/63% and increment from 5% to 10% on lumps has catalysed the progression
6. The peculiarity of this boost is that the freight rate has seen disproportionate increase going up by at least USD 10 per tonne in the last 3 weeks. It is noteworthy that BDI was on down trend till January 4th 2010. The upward movement can at best be attributed to demand pull for vessels for India to China sector.
But the latest factor adding fuel to fire is the likelihood of yuan strengthening after a researcher with the Chinese Academy of Social Sciences, the top government think tank, said China should increase the yuan's exchange rate by 10% in a one off revaluation.
If this revaluation happens, imported ore would become cheaper for Chinese mills by about CNY 100 per tonne (USD 15), from existing level of CNY 950 per tonne FOT Chinese ports, thus giving room for increase in USD prices for imports.
Grade Change
Fe 63.5/63% 25.0%
Fe 63.5/62.5% 25.3%
Fe 63/62 % 26.0%
Fe 62 / 61% 25.7%
Fe 61 / 60 % 27.1%
Fe 60/59 % 28.8%
Fe 59 / 58 % 29.0%
Fe 58 / 57% 27.1%
Fe 57/56 27.3%
Fe 56/55% 27.5%
Fe 55/54 % 27.7%
Fe 54/ 53 % 27.9%
Fe 53/52 % 28.2%
Fe 52/51 % 32.4%
Change is on January 6th 2010 as compared to December 11th 2009
Now the main issue is that are we looking at USD 150 per tonne mark in coming days.
and just imagine fellas, we are stock piling the high grade ore ~ 60%fe -63%fe, this is looking better by the day.
NSL Price at posting:
17.5¢ Sentiment: ST Buy Disclosure: Held
(20min delay)