Fortescue steps up iron ore sales to India
Singapore, 12 March (Argus) — Australian iron ore producer Fortescue Metals has stepped up sales to India, diversifying from the traditional market of China where sales of its low-grade fines have been slower over the past year.
Fortescue possibly made sales of up to 2mn t of fines to India since January, a market it had not previously made significant sales, according to shipping data. Shipments have been offloaded at Krishnapatnam port on the east coast and Jaigarh on west coast India.
Fortescue's sales have overtaken those of other Australian mining firms seeking to expand markets beyond buyers in east Asia. Roy Hill and Rio Tinto have shipped less than 1mn t of iron ore to Europe since early 2017.
India produces large volumes of low-grade fines in the coastal state of Goa, most of which is exported to China as offtake for sub-62pc fines is quite limited in the Indian market. Other states such as Odisha and Karnataka also produce low-grade fines. Most Indian steel mills prefer using high-grade domestic lump, followed by high-grade fines.
Most of Fortescue's volumes have been bought by a large, private-sector steel mill that has the blast furnace technology to make quicker adjustments to its burden than other producers.
A widening of the spread between benchmark 62pc fines and 65pc fines prices have made it more expensive to import Brazilian and South African pellet feed concentrate into the Indian market, prompting this steel mill to use more sub-58pc Fortescue fines as a blend with higher-grade Indian fines and lump.
Lower impurities and consistency of Fortescue's fines makes it a better performer in the furnace than Indian low-grade fines. Discounts of 40pc on SSF fines and 35pc on blended fines to the March 62pc index makes it cost-effective for Indian buyers.
Fortescue is keen to expand sales into India with sluggish demand in China where mills prefer to buy higher-grade ores to step up productivity amid higher profits and firmer demand for steel. Environmental restrictions are also prompting increased use of higher grade mainstream fines and direct charge material.
But sales into India are likely to remain a fraction of Fortescue's projected 170mn t sales exports in the July 2017-June 2018 fiscal year. A tightening of the spread between the 65pc and 62pc prices could push sales of Brazilian and South African pellet feed concentrate is also turning off the tap on Fortescue's volumes. India's annual iron ore imports are forecast to be stable at 4mn-5mn t in the 2018-19 fiscal year starting 1 April.
Rio Tinto's sales into Europe have caught the attention of traditional suppliers into the region. Rio Tinto shipped two Capesize vessels to Turkey in late January and early February, with one cargo possibly PB fines unloading at the port last week.
Roy Hill shipped around 100,000-150,000t of iron ore to the Netherlands in early January. This is only the second cargo that Roy Hill has ever sent to Europe after a July shipment last year to the UK.
|Departure date||Tonnage (dwt)||Company||Destination||Country|
|24-Apr-17||179,481.0||Rio Tinto ||Port Talbot||UK|