Chinese trader buys Indian 50-55 Fe iron ore at $50/t cfr
A slower recovery in China’s housing market and construction sector has put pressure on iron ore prices and India’s pellet producers, traders said at an international forum in Singapore on 24 May 2023.
“We had high expectations from the Chinese market but their recovery from the housing problems of recent years have been slow. Iron ore prices have dropped by 15-30%, depending on grades, in recent months,” said a source at an international iron ore group.
A Chinese trader, speaking anonymously, confirmed buying one vessel of 55,000-ton of Indian iron ore 50-55 Fe per month at US$50 CFR China, a 30-35 per cent discount and a big bargain on expected prices. It is the lowest prices to acquire resources though there has been slower than expected recovery in Chinese construction sector hit by housing problems in recent years.
The Chinese are buying at a bargain though demand for iron ore is weak in their domestic market, he said at the Singapore Iron Ore Forum 2023 held 24 May 2023.
Chinese mills blend lower grade Indian ore with higher grade imported from Australia and Brazil.
Indian secondary steel producers are facing tough times as their margins are squeezed and prices of iron ore-pellets have been sliding due to weak demand from China’s construction sector.
Iron ore of 60FE is traded at US$110/ton cfr China, down from the expected price of US$130.00, according to a source at an international ore mining group.
Indian iron ore of 58 FE, the best allowed grade for export due to restrictions, was trading at US$75/ton CFR China these days, down from US$90 in March 2023.
“Competition is tough but we are clearing volume rather than holding,” said on pellet trader.
Indian pellets are shipped US$110/ton cfr to China these days, down from US$130/ton a few months ago.
While Chinese economists are bullish on their country’s prospects, international analysts feel China faces a slowdown from the 8+ per cent GDP growth.
“This makes traders nervous who have committed volumes to the Chinese market, having signed on iron ore sourcing contracts at premium prices,” said another Indian trader at the forum.
“It is a question of market stability,” the trader underlined. “We are also under pressure from our miners who have signed up mines based on premium prices of the iron ore that were expected.”
The heavyweight Indian steel producers are not impacted by the speculative trade and the price volatility as they have long-term contracts committed to the domestic market, according to the traders.
“It is us, the secondary producers, trading pellets in smaller volumes. Today’s market conditions certainly put some of our expansion plans on hold,” the trader said. Fiinews.com
