Iron ore spot eyeing further gains on fewer cargoes

Tuesday, 15 Nov 2011

Reuters reported that iron ore may stretch its winning streak to a third week, supported by Chinese buying interest and tight supply in the spot market as traders withhold some cargoes, waiting for prices to rise further.

The steelmaking raw material has gained nearly 18% in the past 10 trading days as steel mills in China, the world's biggest iron ore buyer, replenished inventories after prices fell more than 30% in October. But some physical traders have been holding back cargoes, hoping to sell later when prices turn even higher.

An iron ore trader in Singapore said that "Traders are buying aggressively, but whatever they're buying they're just keeping it with an intention to sell later at a higher price. Everybody's lost a lot of money when prices dropped sharply so now they feel the market will continue to turn up and are offering at levels higher than where the market is."

Chinese consultancy Umetal said that offer prices for Australian 63 grade Newman iron ore fines rose a dollar to USD 143 to USD 145 a tonne, including freight and Indian 63.5/63 grade fines increased USD 3 to USD 142 to USD 145.

It said that restocking by smaller Chinese steel mills had boosted their average iron ore inventory to 26 days of use now from 21 days at the end of October, Macquarie said in a note. That is still below the 28 to 33 day inventory range from March to September.

(Sourced from Reuters)

Indian iron ore prices firm vs falling international prices - JSPL

Sunday, 06 Nov 2011

In an interview with ET Now, Mr Sushil K Maroo group CFO of JSPL, gives his views on steel demand and iron ore prices.

ET Now - First a word on steel demand, one is getting a sense that global steel demand has got stagnated and that will hit Indian companies?

Mr Sushil Maroo - In fact, global steel demand has come off in the last two months time. Demand has gone down in China also and everywhere else because the world economy is really not doing very well. So, certainly the prices of raw material are also falling because of that, but unfortunately in India the prices of raw material are not falling and availability of iron ore is also in question. So steel prices are still very firm. But the demand in India for steel is not growing because of various reasons as the interest rate is very high and other industries are also getting affected adversely because of low demand of their products and higher interest rate, low liquidity. So, the steel prices in India are firm, still not fallen, but the demand is really not rising.

ET Now - Iron ore prices in India as well have risen recently but globally there has been considerable weakness give us your outlook on the same?

Mr Sushil Maroo - See the global iron ore prices have fallen something about 35% to 45% in last one month. But in India iron ore prices have not fallen commensurately in fact because many mines are closed, availability of iron ore has become very difficult now and many steel companies are having a lot of problems. The export of iron ore also has slowed down from India because they are not able to get the kind of prices they were getting in the past.

(sourced ET Now)

Jharkhand ore cheaper in Karnataka than in E Auction

Thursday, 20 Oct 2011

BL reported that the high prices of iron ore routed through E auctions and issues linked to iron content in dispatches are forcing steel and sponge iron makers in Karnataka to look to Jharkhand and Orissa.

Mr Dinesh Kumar Singhi MD of Karnataka based BMM Ispat told Business Line that the base price of INR 2,010 a tonne for the 57% iron grade in the last auction was too high, considering that buyers were getting the same earlier from NMDC Ltd for about INR 1,400 a tonne, before the Supreme Court on September 2 directed the state to hold E auctions.

He said there were no takers for about 65% of the stocks lined up for the last auction conducted on October 14.

When told that NMDC officials had said the pricing was in line with those in China and Japan, he said the price of 57% grade in China was about USD 110 (INR 5,390), which factored in about INR 3,000 for transport, beside 20% export duty.

On Karnataka e-auction prices, he said in addition to the base price, buyers would have to pay 10% for royalty, 12% as forest development charges and 1% cess, totaling 23% more, which pushed the price to INR 2,472 a tonne. Transport would cost another INR 750 a tonne.

In comparison, the 63.5% grade from Jharkhand could be got at INR 4,200 a tonne, inclusive of the transport cost of INR 2,200.

(Sourced from thehindubusinessline.com)

Indian-origin iron ore prices fall 12% in China

October16, 2011

Bangalore: The global financial turmoil and reduced demand for steel products in Europe has adversely affected the prospects of Indian iron ore exporters to China. Despite shortage in supply of iron ore from Karnataka and Orissa, prices of Indian-origin iron ore in Chinese markets have dropped to $168 a tonne, as against $191 a tonne about 15 days ago, declining 12 per cent.

“Both Chinese steelmakers and traders expect the market to further drop due to the global financial turmoil and reduced demand. After the week-long national holiday in China, prices fell $6 on a single day and finally settled at around $168 a tonne, compared to $178 a tonne a week ago. The major reason is the global sell off in bullion and the overall negative sentiments for commodities across the board,” said Praveen Kumar, chairman, Maya Iron Ores, a commodity broking company.

He said prices have fallen sharply in the last one week in China and the high grade iron ore fines (63 iron content and above) are now ruling at $168 a tonne and the low grade (53-54 iron grade) are trading at $98 a tonne. The prices are likely to hover around $150-160 a tonne in the next couple of months provided the global financial markets stabilise.

“The sentiment among Chinese buyers is very low at this moment. Despite buying a record quantity of 60 million tonnes (mt) in September, the Chinese buyers are lying low for now,” Kumar said. He added that the government action in Karnataka and Orissa resulted in the rise in prices. But, they are now falling due to global sentiment, he said.

Iron ore stockpile in china posted a decrease after several weeks and stood at 93 mt approximately. Indian stockpile continued its decline with current stock level of around 12 mt across the major ports.

Due to the lack of material availability and reduced price advantage, Chinese mills have ventured to other countries like South Africa and Chile for iron ore procurement. “Indian iron ore currently has a Chinese market share of 27 per cent, which if the Indian government does not take swift measures to normalise the export segment, can considerably reduce in the following years,” Kumar added.

Meanwhile, the Federation of Indian Mineral Industries (Fimi) expects export of iron ore from India to come down this financial year to around 70 million tonnes, against 97.6 mt exported last financial year, declining 28 per cent. The drop is mainly due to shortage in supply from states such as Goa, Karnataka, Orissa and Jharkhand. In 2010-11, India’s iron ore exports stood at 97.5 mt.

“The ban on export of iron ore in Karnataka and shortfall in Goa along with problems in eastern states have compounded the problems for iron ore exporters. We don’t see any hope for the sector in the next few months,” R K Sarma, secretary general, Fimi told Business Standard.

For the first four months of the current financial year, iron ore exports from India have dropped 22 per cent to 25.29 mt, as against 32.36 mt. “Karnataka largely exports low-grade iron ore to China and for the past one year there have been no exports because of the ban by the Karnataka government. Until the matter is resolved in the Supreme Court in favour of exporters, we cannot hope for resumption of exports from Karnataka,” said D V Pichamuthu, director, south, Fimi.
(sourced Business standard)

Iron ore duty hike will temper steel price rise - Mr Sajjan Jindal

Wed, 09 Mar 2011 By BL

Mr Sajjan Jindal vice chairman and MD of JSW Steel said that though coking coal and iron prices are on a high, any further hike in steel prices could hurt demand in the country and that the budget proposal to increase the iron ore export duty to 20% should alleviate some concerns and lead to drop in prices of around INR 1,000 a tonne in the next two three months.

Mr Jindal said that “With the economy and manufacturing sectors growing rapidly, demand is bound to grow, but the ability to absorb further price hikes is limited and prices will rise in the short-term. But the Government has done a very good thing by proposing the export duty on iron ore at 20%. It will increase availability of iron ore for domestic companies and prices could come down by as much as INR 1,000 a tonne over the next 2 to 3 months.”