This is some really fascinating data. In summary exports from India to China has been highly correlated with the performance of the IO price.
in April when IO prices were hovering in the 100-110 mark, exports reduced to around o.3mt per week from India. In the last couple of weeks, they’ve increased to about 0.75mt per week, but still well below the Jan-Feb weekly average of about 1mt.
The discounts of 54% to 57% Indian IO is quite high as well ranging from 25% to 36% currently. This puts FOB costs for 57% Indian IO at USD 66 and (cfr USD 66 for 54% Ore)
you can see as well that port stocks at Chinese ports are plateauing at present too.
It appears that once IO prices are around the USD 100 mark, it becomes mostly unprofitable for Indian IO; hence the much lower exports.
Currently steel consumption and production is booming in India . While they are still under the IO production levels, in a couple of years, steel mills will require much of that surplus IO or the govt will limit the amount of IO exports to make available for local steel mills to reduce steel imports.
In the meantime this data appears to validate that increasing cost curves put the floor on the IO price around the USD 100 mark. The increase in port stocks for much of the year has been significantly related to the increase in IO exports from India.
India: BigMint's iron ore fines export index inches down in absence of deals...Fines/Lumps
By
BigMint Bureau46 Reads
16 May 2024, 19:59 IST
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- Trade activity remains muted
- Bid-offer disparity in market
BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index fell w-o-w by $65/tonne (t) FOB east coast on 16 May 2024. The Indian sea market remained muted this week following no active deal was recorded this week so far.
Indian market participants were reluctant to book material at the current offers as they were expecting the market to improve in the coming days. Sellers are also cautious for booking therefore they are holding material amid bid-offer disparities.
The fines export for Fe 57 fines stable at around 25-27% discount. However, in another grade like Fe 54/55 grade export material stood at 36% discount which is equivalent to $66-67/t CFR.
As per one of the traders, market has improved today as it had been fallen since the beginning of this week. Therefore few deals were expected to be concluded once the market improves. On the other hand, Fe 57% prices in Odisha's domestic market stands at INR 3,250/t, ex-mines.Price indicators- No deal was reported in this week hence not taken into price calculation under T1 trade and given 0% weightage in the index calculation. For detailed methodology Click here.
- BigMint received seventeen (17) indicative prices in the current publishing window and twelve (12) were considered for price calculation as T2 inputs and given a 100% weightage..
On the other hand, portside offers in China of Indian iron ore fines (Fe57%) increased w-o-w on 16 May. Offers were recorded at around RMB 665/t ($92/t) at Qingdao Port, inclusive of all import taxes and port charges. Meanwhile, prices are also up by RMB 10/t ($1/t) d-o-d.
The number of seaborne cargos arriving at ports has risen, causing the already high inventory level at ports to increase even more as landing margins continue to look grim and the cost for May-landing cargoes remains high, prompting traders to contemplate selling off their positions before the cargos.
Notably, iron ore inventories at China's major ports continued to remain on higher side at 144.5 mnt on 16 May compared to the last week, according to SteelHome data.
Other highlights:- Iron ore spot prices inch down w-o-w: The benchmark iron ore fines index edged down by $1.2/t w-o-w to $114/t CFR China on 15 May. The spot iron ore prices dropped as the market participants adjusting to the potential weakening fundamentals. Due to small decrease in production margins, mills are focusing towards purchase of lower quality fines that come with bigger discounts in the market.
- DCE futures climb w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the September 2024 contract increased by RMB 15/t ($2/t) w-o-w to RMB 881 ($122/t) on 16 May. Prices increased by RMB 23/t ($3/t) d-o-d today.
- India iron ore shipments marginally up w-o-w: India's iron ore export shipments were recorded at 780,385 t in the third week of May, compared to 769,820 t in the last week, as per vessel line-up data maintained with BigMint.
OutlookThe seaborne export market for Indian iron ore fines is anticipated to remain volatile in the coming week amid fallen margins and largely stable inventory.
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16 May 2024, 19:59 IST
(20min delay)
