As predicted vide our article “Are Indian iron ore spot prices inching to USD 150 mark in China” on March 16th 2010, some deals for benchmark grade 63.5%/63% iron ore of Indian origin are reported to have been done at USD 150 per tonne CFR China basis last week.

Tight supply conditions, mainly due to problems in mining and movement in Eastern India, coupled with railway freight hike of INR 300 per tonne this week pushed up FOB levels further by 6% to 13% during last week.

But, the main factor pushing CFR China prices is the surge in sea freight, which is reported to have climbed to about USD 36 per DMT or say USD 38 per WMT considering 6% moisture levels.

Although the direction of spot market of iron ore is uncertain, some market players believe that this round of surge is likely to push the prices up to USD 160 per tonne levels CFR China, before cooling down

While, Indian iron ore miners stand to make killing at these levels, Chinese steel mills are facing doom. But this clearly reflects that Chinese mills, which are churning ore than 50 million tonnes of crude steel every month, are in a helpless situation and really have no choice and even in benchmark settlement, if any, we could be seeing doubling of prices.