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Asia iron ore prices at highest since August 08

Iron ore prices in Asia were up on Thursday, continuing a rally that started last month, with high grade ores at their highest since August 2008, as a fallout of China's ban on import of low grade ores by traders.

Miners and exporters said trading volumes were thin as the market waited for more clarity on China's ban last week of imports of ores with iron content below 60 per cent, in a bid to ease prices."Our clients in China are not affected by this ban, but still we are not trading. We are waiting for more clarity," said a mid-sized miner and exporter based in the western Indian state of Goa, which produces large amounts of iron ore fines.

Last week, the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters (CCCMC) banned its members from importing ore with iron content of less than 60 per cent in a move seen slashing India's exports, which comprise mainly low-grade ores.

On Thursday, ores with 63.5 per cent iron traded at $180-$182 a tonne basis C&F, up about 9 per cent from $167 a week ago, China consultant Mysteel's data showed.

Indian exporters also quoted prices at $180-$182, but said few deals were being done due to a shortfall of high-grade ores.

"Cargo is there at the mines, but there is none at the ports," said a trader based in the eastern state of Orissa, where the government has curbed the movement of iron ore in a long-standing action against illegal mines. Low-grade iron ores were up only modestly, traders said.

One dealer in a large trading company in south India said iron ore of grade 58 quoted at $145-$146 C&F, up just a couple of dollars from a week ago.

India's exports are set to fall with the arrival of the annual monsoon next month, that could further tighten global supplies, traders and an analyst said.

Monsoon, said to be normal this year, arrives at the end of May and lasts till September and would close most shipments of iron ore fines that tends to absorb moisture and make ships too heavy for normal operations.

In a report titled ‘Irrationality fast sending iron ore prices to $200 a tonne', Credit Suisse said the China restrictions and the Indian monsoon, among other factors were firming up the market.

Steel and freight prices, that iron ore traders track to get a future direction on prices, were both up.

The Baltic Exchange's main sea freight index rose 1.3 per cent on Wednesday helped by Chinese demand for thermal coal. Steel prices in China were firm on the rise in building boom.

Source : Business Standard