July mayhem has had a severe backlash on the spot iron ore prices. Feebleness in raw material market is direct fallout of decrepit in finished market. 5% drop in iron ore price in July is mirror image of 4 to 5% decline in steel prices. Slew of drags on the economy and industry are as follows:
1. High inventory about 16 million tonne of finished and 98 million tonne of iron ore
2. Slow demand from construction , infrastructure , automobile and white good
3. High lending rates and tight credit
4. Off seasonality
5. Never receding EU crisis
6. Errant escalation in steel production
First 10 days of July accounting for 17 million tonnes of Steel production by CISA member mills is bellwether of the rampaging production with self- decimating connotations.
In spot market, enquiries and trades were sluggish. Most of steel majors having reduced prices for August by CNY 200-300 per tonne has send negative sentiment.
Ambiguity in the iron ore market was galore with no tenders and sellers in a hapless situation jumping at slightest opportunity to ease pressure. Brazilian 63.50% fines traded at USD 130 per tonne on CBMX while Australian PB fines were offered at USD 126 per tonne. Indian Fe 63/63.5% was offered at USD 136 per tonne.
Iron ore prices would correct further in the coming week since there is unlikely to be any buying by the mills as the pressure to curtail production mounts on declining steel prices.
Iron ore fines
|Fe 60/59 %||-4%|
|Fe 59/58 %||-4%|
|Fe 57/56 %||-3%|
|Fe 55/54 %||-4%|
|Fe 54/ 53 %||-5%|
|Fe 53/52 %||-4%|
|Fe 52/51 %||-4%|
Change is on July 20th as compared to 13th July 2012
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.
Domestic iron ore spot pricing information updated 5 days a week whereas export spot prices FOB Indian port as and when they change
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Source - Steel Price India