Chinese spot iron ore prices assessed at USD 64.75/MT, CFR China, yesterday (i.e.27th Nov), drop down to 4 months low as the prices were last observed towards mid-July. The Chinese iron ore prices have witnessed fall of 14% this week as against USD 75.45/MT, CFR China last week. The prices for high grade ore depicted fall due to narrowing steel margins and preference for low grade amidst expectation of less stringent regulations in Chinese market.
The comparatively less expensive medium grade and lower grade fines are in high demand due to continued need to cost lower production. This is resulting in reduced price gap between low grade and high grade ore.
The liberal environmental regulations in China compared to previous year and high stock inventories at major Chinese ports, have led to increased supply of material and reduced the spread between bids and offers received. However, the steel demand continues to be on lower side amidst cold weather.
China has allowed cities and provinces to set their own production curbs accordingly, which is expected to lead to further more steel production but lower demand amidst reduced construction activities due to winters effecting steel margins.
The weakening steel margins have also affected Iron ore futures in China to drop down to lowest in about four months on Tuesday (27th Nov). Chinese domestic billet prices have come down by USD 120-130/MT in last one month amid short selling and de-stocking. Similarly finished steel prices have also come down sharply.
Iron ore stock at Chinese major ports:
The daily cargoes arrivals at five largest Northern ports (Qingdao, Rizhao, Tianjin, Caofeidian and Jingtang) assessed at 1.12 MnT as on 23rd Nov, up 0.15 MnT against last weekend, according to SteelHome data.
Iron ore inventory at major Chinese ports recorded at 140.95 MnT as on 23rd Nov, up 0.35 MnT from last week.
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