Indian iron ore prices crashed further by about 4% to 10% for various grades on week closing to bring the total crash to 20% for higher grades and about 40% for lower grades since last peak of April 29th 2010.
At present, the situation for Indian sellers is quite grim as the Chinese buyers are taking advantage of distressed cargos to push the CFR levels down and have already achieved USD 150 levels.
As per some market players, we shall be seeing minimum USD 120 per tonne FOB levels for 63.5%/63% grade very soon before the market rebounds.
Despite such massive reduction in last 20 days, positive sentiments exist mainly on following
1. The “Must sell” cargos, although the number can not be ascertained, would not be more than 15-20 thus totaling about 1 million tonne and would get exhausted in a week or 10-12 days ending desperation on seller’s side.
2. The ray of revival in Chinese domestic steel market has been rekindled with slight recovery in rebar prices in last 2 days of the week. If it continues, it would lend support to positive sentiments in coming days
3. One of the Big 3 is reported to have dropped USD 160 per tonne as opening shot for Q3 pricing, thus announcing hike of more than USD 50 per tonne as compared to USD 110 per tonne for Q2. Although, the final hike can not be guessed, possibility of hike should make Chinese buyers securing huge volumes of Indian iron ore on spot thus bringing back the life back into the market.
With the impending gradual shift form benchmark pricing based long term contracts to spot cargos, it has become more vital for both sellers as well as buyers to precisely monitor the daily movements of iron ore spot prices to keep tab on trends and spot opportunities.
This has galvanized us to start reporting domestic prices of iron ore at Barbil & Bellary and export prices on FOB Indian port.