Indian suppliers of iron ore keep following the upward trend in mid January and push both export and domestic prices to new highs.
Currently, 63.5% Fe fines are priced at $170-172/t FOB Vishakapatnam, by an average of $8/t up from late December. At the same time, offers of similar material continue gathering pace reaching $175-178/t FOB. The market is seeing rather high buying activity with large number of deals mainly for low-quality material.
Notably, some producers of iron ore have managed to book 62% Fe fines at $168/t FOB, while similar material with 60% and 58% Fe content has been shipped at $146/t FOB and 139/t FOB, respectively.
The main reason for the rise is limited volumes of high-quality material. Besides, already adverse conditions in the market, partially due to export restrictions in Karnataka, may be aggravated by a forecasted decrease in shipments from Odisha state (previously called Orissa). Although it was not officially confirmed, suppliers have made use of the situation and raised prices. The recent information that the duty on iron ore fines and lumps exports is planned to increase to 20% for both types of the material has also added fuel to the fire. Noteworthy, current export duties are 5% and 10%, respectively.
Domestic prices have started growing too, following the export ones. Private mining companies have decided to take upward moves after state-owned company Orissa Mining lifted contract levels to $118/t Ex-mine and $128/t Ex-mine for fines and lumps, respectively. Thus, iron ore fines offered in the spot market have gained $20-25/t on average, and now the material is being sold at $115-120/t Ex-mine. Quotations of lump ore have moved up to $150-155/t Ex-mine (+$10/t to late December levels); 64% Fe pellets are available at $175-190/t EXW.
Market participants forecast the trend will persist due to growing shortage of the material as well as higher prices for finished products in China.
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