The recent slump in global iron ore price signals the market
may be reaching a turning point, China's top listed steel mill Baoshan Iron
& Steel Co Ltd (Baosteel), said on Monday, adding that the price
correction will allow a healthy expansion for steel producers and miners.
Baosteel, which reported a 51-percent slump in third-quarter
net profit on Friday, also said it was in negotiations with top iron ore
producer Vale SA to review prices for fourth-quarter supplies.
“I expect the current tightness in iron ore supplies to
ease by around end-2012 or 2013. The market may even reverse to be oversupplied
after a flurry of mine investments,” Baosteel General manager Ma Guoqiang
said during an online results briefing.
Sponge iron prices across India remained stable despite sluggish demand in finished steel prices. Prices were more or less stable compared to last trade.
Sponge manufacturers are unwilling to cut prices looking at shortage of Iron ore after Orissa mining authority has stopped issuing permits to domestic manufacturers and exporters.
Prices Ex-works, excise and taxes ext
Turkish and Indian import prices again fell by 2-3% last week along with US domestic scrap prices.
Imported scrap was traded at an average of US$ 435/MT i.e. down by US$ 25/MT (month on month basis ) as buyers showed little interest in deep-sea cargoes. The current price level is the lowest level since November 2010.
In shredded material, prices fell by US$ 40/MT (month on month basis). The weekly Indian containerized shredded scrap import prices fell also sharply by 3% from last week's level. Industry demand dropped owing to the Diwali holiday, while the currency fluctuations have restricted the demand since past few months.
The price of iron ore is likely
to decline further in the coming weeks, with steel mills in China still
unwilling to buy and stockpiles of expensive ores remaining stubbornly high,
the country's steel industry association said on Monday.
Zhang Changfu, the vice-chairman
of the China Iron and Steel Association (CISA), told a news briefing on Monday
that mills were clearly unwilling to buy ore at current prices while domestic
steel demand falters and dozens of smelters shut down.
“In my personal opinion, the
price of imported iron ore will fall further, because the trends for the whole
sector are unlikely to get better and steel mills don't dare to buy ore,”
He said stockpiles at eight major
ports had risen to 98 million tonnes, with much of it bought at prices of
Zhang said CISA was currently
talking with the three major iron ore suppliers, Vale , Rio Tinto and BHP
Billiton , about reforming the pricing system, adding that Chinese steel mills
were currently buying ore mostly on a spot price basis.
Orissa mining authorities have stopped issuing permits to exporters since last month and likely to extend it till November end says market participants.
“There is absolutely no work in this region, Deputy Director of Mines, Joda has stopped issuing permits to exporters and manufacturers since last month, after Indian railways alleged Rashmi Metaliks to misuse railway transport facility.” said a trader based at Barbil (Orissa).
Falling spot iron ore prices in Chinese market adding trouble to Indian miners and exporters, he added.
Few mines in Jharkhand such as KD Sharma and Rungta mines are expected to re-open on 3rd November.
“The mines remained closed for a long period of time but now they have attained clearances from the Environment Ministry and will start taking bookings from the first week of November”, said an Iron ore trader.
High prices of iron ore routed through e-auctions and issues linked to iron content in dispatches have prompted most of the steel and sponge iron-makers in Karnataka to procure ore from Jharkhand and Orissa. So, demand at present looks good and prices are expected to remain firm in the near term.
Spot Iron ore prices have fell down by 30 percent this
month, its biggest fall since August 2009 as thin demand from top buyer China
forced traders to sell at a loss.
Highlights of the
* Offers for Fe
63.5/63 of Indian fines dropped sharply to reach as low as $ 130/MT (CNF), i.e.
down by $ 20/Mt from the last week.
* There were a lot of distressed cargoes in the spot market,
or shipments that traders needed to sell because they didn't have enough funds
to hold them and wait for prices to recover.
* Inventories of imported iron ore at major Chinese ports ended
this week at 92.74 million tonnes i.e. up by 520,000 tonnes from the end of
* A sharp drop across iron ore price also prompted a choppy trading on the OTC iron ore market. Forward swaps prices for October contract fell to reach $151/153/MT.
“The situation is still very bad. There are some mills
which are starting to buy but they're only willing to pay a very low price,
even lower than the current spot market rate,” said a physical iron ore
trader in Shanghai.
However, according to analysts, “prices have neared a “floor” and there are chances for a rebound to as much as $30 a metric ton to near $150
a ton in coming weeks. The scale & speed of this week's correction has
little to do with trade fundamentals. The reported collapse in trade liquidity
instead suggests a 'buyer's strike', with consumers deferring purchases until
Joint Secretary in the Union Mines Ministry, G Srinivas, in
an October 25 letter to the Goa government, has said that 44 mines exceeded the
20 per cent targeted production limit.
“Of these, IBM has taken action against 19 of such mines
in Goa which had exceeded the limit of extraction, and initiated action against
balance 25 mines in terms of Mineral Conservation and Development Rules (MCDR),”
The letter states that aggregated production from all the 114 mines is within
the permissible 15 per cent of targeted run-of-mines production in the approved
Srinivas has asked Goa government to conduct environment impact study through
Goa State pollution Control Board (GSPCB) to ascertain impact of the violations
of extraction limit.
Supply crunch of iron ore has
cast a shadow on Bengal's showpiece project – Sajjan Jindal's integrated steel
and power plant at Salboni in West Midnapore.
JSW officials have informally
requested the state to help them procure iron ore from National Mineral
Development Corporation's mines in Orissa and Jharkhand. JSW Bengal got three
coal blocks in state dispensation route, Kulti, Ichapur and Sitarampur in
Raniganj belt and the estimated combined reserve is over 600 million tonne.
Incidentally, the project is also
facing land hurdle as mutation for the entire land (4,334 acres) is still
pending. The company officials would meet state industries minister Partha
Chatterjee and West Bengal Industrial Development Corporation (WBIDC) managing
director Nandini Chakraborty on Saturday where the issue is likely to be
However, the only silver lining
is that NMDC has not ruled out the possibility of limited iron ore
linkage for the project. JSW Group is now planning to set up a 3
million tonne steel plant and a 300 MW power plant with an investment of Rs
20,000 crore in the first phase.
NMDC chairman and MD, Rana Som,
told that it has got a couple of mines in Orissa where the production is not
fully tied up. It has also got prospecting license for a big mine in Jharkhand.
“There is no request so far from JSW for its Bengal project. We are
supplying iron ore to other JSW projects,” he added.
Black Sea and Turkish billet export prices slipped this week
as a fragile economic outlook pushed buyers to delay purchases and weaker raw
material costs made it possible for producers to lower their offers.
Traders quoted Black Sea billet at $605-$615/MT
free-on-board (fob) Russia and Ukraine, compared to $620-$640 three weeks ago.
Turkish billet was at $625-$630/MT FOB from $660/MT at the beginning of this
Many buyers of billet a long steel semi-finished product
used into construction delayed their bookings, thinking that further price decrease
was likely to give economic uncertainty.
“There are many questions on the physical side;
traditionally this time of year is the bottom of the market and there is
limited scrap in the U.S. but, on the other hand, demand for rebar remains
weak,” a U.S.-based billet trader said.
“With scrap at the bottom and the uncertainty in the
financial markets, we will get a better picture by the end of this week or the
beginning of next.”
On the London Metal Exchange, the benchmark billet contract
was at $520/540 a tonne, from $559.21 a tonne at the close last Tuesday.