Global iron ore prices are assessed at USD 52.7/MT on 23 May’16. Prices are moving down as steel prices dropped down as well as increased iron ore port stock inventories.
Chinese billet prices in Tangshan fell a cumulative RMB 130/MT (USD 20/MT) since Friday while rebar prices lost RMB 200/MT (USD 30.7/MT). Today, prices were at RMB 1,870/MT (USD 288/MT) against RMB 1,930/MT (USD 297/MT) on 21 May’16. The slowdown in Chinese buying activities seems to be a prime factor of price corrections. The current level of RMB 1,870/MT (USD 288/MT) was last seen on 12 Mar’16.
Seasonal demand for steel has passed and the current weather, hot in some parts of China and rainy elsewhere, has slowed down construction activity.
The profitability of Chinese steel mills has taken a hit along with prices of iron ore and steel since the sharp price rally in Apr’16 had encouraged Chinese steelmakers to resume production upon higher margins, mostly after February’s Lunar New Year holiday.
Stockpiles at major Chinese ports have climbed above 100 MnT, last seen in Dec’14 at such levels. Inventories rose from 99 MnT in Week 20 to 102 MnT in Week 21.
In Apr’16, the country imported 83.9 MnT iron ore, but rising iron ore port inventories show that iron ore imports aren’t being consumed by mills quickly as they are arriving. However, in May’16, iron ore imports are likely to strengthen as there will be increase in supply from Australia, due to its financial year ending.
Market analysts anticipate that along with the increased steel production by Chinese steelmakers due to International Horticulture Exposition in response to the price increase this year, prices will be under pressure in the coming term.
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