Week 16 opened with a bang with the Indian spot prices making a quantum jump of almost USD 10 per tonne since 16th April. The unprecedented escalation seems unstoppable leaving veterans exasperated. It is noteworthy that the gradient has become steeper with each passing days from 1% in mid February to 11% during the course of last one week.
The following factors needs to be mentioned
1. After the banishing import of iron ore below Fe 60% by Chinese traders India could play only second fiddle as the composition of Indian iron ore is skewed towards low grade. As a result, spot prices of high grade iron ore from India have sky rocketed. Although the CNF prices seem to be prevailing at USD 190 per tonne, freakish cases of USD 195 have also been heard on week opening.
2. Prevailing mining mess in India has further fanned the fire with curtailed supply especially on East Coast.
3. The three mining behemoths viz., Vale , Rio Tinto and BHP Billiton have been playing truant to the roost by withholding supplies to leverage negotiating power in contractual discussions creating a situation of “take it or leave it “ for Chinese buyers.
4. Against the backdrop of limited ore supply, traders are postponing selling in anticipation of better realization thereby supporting the hike.