Prices of Indian fines have risen by 20pc over the past month on higher demand from Chinese steel mills with persistent tight supplies of mainstream mid-grade iron ore at the country's ports.
Market participants assessed the price of 57pc Fe Indian material at around $94-95.70/dmt this week compared with around $88/dmt a week ago and $80/dmt a month ago. Prices were $72-73/dmt in early June. China's iron ore imports from India were 5mn t in July, up by 8.2pc on a month earlier.
Chinese mills are blending lower Fe India-origin iron ore with high-grade iron ore in response to tight spot supplies of mainstream mid-grade iron ore at the country's ports. Prices for Super Special Fines (SSF), another low-grade product, have been higher compared with Indian material, increasing the latter's attractiveness for Chinese mills facing margin pressure. SSF prices are around $114/dmt on a cfr China basis.
Lower cost India-origin fines are being sought out to offset seaborne price increases, as underlined by the Argus 62pc Fe index that hit a six-year high in August.
India-origin iron ore, which is typically high in alumina and low in phosphorus content, is often blended with either domestic concentrates or Iron Ore Carajas (IOCJ) fines — both high in Fe and low in alumina — to bring about cost efficiencies. Blending with IOCJ was more popular these days, a trader said.
"Indian iron ore shipments — including fines, lump and pellet — to China dropped in June and July compared with May due to the impact of monsoon in India. The volume in August was also low. The decrease in shipment was mainly in the fines segment," a Shanghai-based trader said.
More than 40 vessels are waiting to be loaded at the country's Paradip port, an Indian producer said. Most of the export fines are produced in east India's Odisha state, which also accounts for 50pc of the country's iron ore output. The monsoon season typically lasts from June to September.
"The supply decrease from India is partly due to high domestic prices and also due to Covid-19 spread. Cargo movement was restricted at Paradip and Gopalpur ports as the government restricted the movement of trucks," an international trader said.
Concerns have been raised about the volume of Indian iron ore exports after 30 September when the deadline ends to sell stockpiled material at auctioned mines in Odisha. China's ports held 1.4mn t of Indian ore this week, down by 20pc on the previous week and 29pc below the same time last year, a trader estimated.
"Indian domestic demand has picked up, leading to a lower export volume, and mining auctions and new licence process have also affected output. The monsoon season will last till October, slowing shipments," a Shanghai-based trader said.
India's largest iron ore producer NMDC raised its iron ore prices twice last month, followed by another rise this month of 300 rupees/t for lumps and fines.
"Domestic supply in India is quite tight these days and I expect exports volume to drop after September when the deadline for sales of stockpiled material at the auctioned mines ends," an Indian producer said.
Indian pellet producers have flagged concerns about domestic iron ore supplies, citing a shortage of cargoes from the auctioned mines in Odisha. Indian pellet accounts for the bulk of the spot pellet trading in the seaborne iron ore market and sets the cfr China price.
"There has been a rush to export iron ore as international iron ore prices are high," the producer added. Another producer agreed that iron ore exports from India may drop after September as the deadline to sell stockpiled material ends and with pellet producers also likely to face a raw material shortage. Exports of Indian iron ore over 58pc Fe content are rendered uneconomical by the 30pc export duty.
