Iron ore market depleted no holds bar with a decline of nearly 20% this week for higher grades.
Slide has attained apocalyptic proportion. But it is learnt that Indian miners and sellers have not played big role and the route cause of such negative sentiments is the diversion of European cargoes by global iron ore giants to China as the European mill have started to prune their steel production.
As a result, iron ore market in China is in absolute disarray with the buyers vying for lower prices and traders indulging in panic sales. Most of the traders plagued with paucity of funds are unable to take an observant posture.
It is learnt that some of them have struck deals with few mills at USD 40 per tonne to USD 45 per tonne less than the purchase price. Although most of the mills are absent from the market selected few transgressed greed limits by asking for prices USD 5 per tonne to USD 7 per tonne less than the spot levels.
Experts opine that with the dust yet to fully settle in domestic steel prices the momentum will carry the decline by another USD 10 per tonne to USD 20 per tonne before bottoming out since the market tends to overshoot in such situations.
The rapid drop in prices in the past two weeks prompted iron ore miners to tweak long term contract rates for Chinese clients to reflect falling spot rates. But Japanese steelmakers JFE and Sumitomo Metal have stated not to cancel their October to December iron ore contracts instilling some confidence in the beleaguered market.
However the silver lining is that the domestic steel prices have emanated the first signs of bottoming out this week with token increase.
Iron ore fines
FOB India
| Grade | Change |
| Fe 63.5/63% | -18% |
| Fe 63.5/62.5% | -18% |
| Fe 63/62% | -18% |
| Fe 62/61% | -19% |
| Fe 61/60% | -20% |
| Fe 60/59 % | -21% |
| Fe 59/58 % | -22% |
| Fe 58/57% | -23% |
| Fe 57/56 % | -22% |
| Fe 56/55% | -23% |
| Fe 55/54 % | -25% |
| Fe 54/ 53 % | -27% |
| Fe 53/52 % | -30% |
| Fe 52/51 % | -34% |
| Fe 51/50% | -39% |
| Fe 50/49 % | -44% |
Change is on Oct 28th as compared to 21st Oct 2011
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