MBIO Index 2 Mar 2010: Index holds at 12 month high

02 MARCH 2010

The MBIO Index today calculated to $132.76/tonne CFR Qingdao on a 62% Fe basis, a slight increase of $0.13/tonne from yesterday’s figure, although this does set another 12 month high. After the surge in iron ore prices since the end of the Chinese New Year holidays, sentiment now starts to show some sign of weakening, although that is not an opinion shared by all market participants. Transactions of Indian material at 63.5% Fe have remained in the range of $138-140/tonne cfr China, and offers in the range of $142-143/tonne on the same basis. These offer prices are a slight decrease on recent days, suggesting that buyers are holding back from purchases, and suppliers are having to be more competitive in order to secure sales. Part of the issue has been freight related. The surge in buying in anticipation of the increase in the Indian export tax has led to a jump in freight rates. The India to China Supramax rate has risen to $22.60/tonne for iron ore, up from $19.20/tonne a week ago. The $3.40/tonne increase accounts for approximately half of the increase in the Index since the end of the Chinese holiday. In contrast, rates from both Australia and Brazil have fallen, with the cost of delivering iron ore from Brazil barely any more than from India.