2010 opened with a big bang for Indian iron ore miners as spot prices for export of Indian iron ore fines surged by 7% to 16% for various grades last week. Domestic prices also exhibited major gains at both Barbil and Bellary
It is reported that prices of 63.5/63% grade iron ore fines have already breached USD 120 per tonne CFR China mark and are closing on USD 125 per tonne mark. Some market players have opined that we should not be surprised if the CFR prices reach USD 130 per tonne mark in coming times.
The factors behind tight markets include
1. Restricted supply due to Indian iron ore mess
2. Increased demand of iron ore from Chinese mills due to increased production levels supported by improving domestic steel prices
3. Indian government has further compounded the situation by raising the export duty on iron ore lumps to 10% from 5% and on iron ore fines to 5% from nil equating to about USD 3 per tonne to USD 4 per tonne.
4. Raising of forecast of hike in benchmark price settlement by some of banks and market players is supporting higher prices.
FOB prices have gained 15% to 26% for various grades in last 22 days since the last low on December 11th 2009.
On the other hand, yearly comparison reflects 40% to 63% increase in FOB prices for Indian iron ore fines.