Iron ore prices reached a new high as buying interest for medium grade iron ore fines remained strong amid tight supply. The new high marks a record boost in nine years for the global index. This has also given a solid boost to the Indian export index of low grades fines
Iron ore is mined in approximately 50 countries across the world. The metal's huge demand can be attributed to make different items of steel which has iron as its core component. Steel is used in buildings, cars, white goods etc.
The supply and demand of steel is fuelled by the global economic growth. As the economies grow, steel becomes stronger driving prices up.
The world's largest consumer of metals is China and economic health of the country is hugely important for the rising and fall in iron ore prices.
According to a news portal confirmed export trades of around 125,000 t Indian low-grade fines were recorded recently. Sources in the market also reveal that the recent cut in steel production announcement in Tangshan may alter the steel manufacturing raw material feed process in the coming days. If the reports are to be believed pellet and other high-grade raw materials may be more preferable than the low-grade ore and sinter if the quality of air does not improve.
Rigorous production and transportation restrictions came into effect from March 29and will last until March 30, sources report.
Why Indian iron ore fines are seeing a spurt?
It is important for steel manufacturers to keep their furnaces running at all times. Any halt in the functioning of these furnaces could harden into a mass of solid iron. Replacing this with a new once can incur huge costs. The only way to cut cost is by sourcing cheaper quality of ores to keep the furnace functional.
India exports lower grade iron ore to countries such as China, Japan and South Korea. Export of over 58% iron content.
The country had already started boosting its iron ore exports since last year to make up for the global supply gap as supply from the Brazil and Australia, the world's giants in the sector was decreasing.
Experts in the industry say the supply from these two countries is likely to be less even in the future. This will make lower grade iron ore to be more preferred and help boost more iron ore exports from India in the coming months.
According to a high profile steel analyst countries look for higher grade iron ore when the profit margins are high. Currently, Chinese steel mills are on a low and the margins are hovering around good margin .In such situations they will try and procure something that is being offered at a lower market price.
Experts in the industry put India's potential to export at a higher level due to the increased supply in the domestic market and good prices.
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