China’s market for iron ore will likely be oversupplied this month, as availability will increase to some extent while ore demand among steelmakers may weaken further compared to last month, according to Mysteel’s latest monthly report.
During this month, Mysteel expects that China’s ports will receive more imported iron ore than had arrived last month, judging by the volume of ore shipped from ports in Australia and Brazil which rose on month in November.
The total volume of iron ore dispatched to global destinations from the 19 ports and 16 mining companies in Australia and Brazil under Mysteel’s survey gained by 1% on month to 101.7 million tonnes over October 31-November 27, also some 5% higher than the average monthly shipment volume during January-October.
Meanwhile, overseas miners will beef up shipments of ore this month to achieve their quarterly or annual delivery targets, so new ore arrivals at Chinese ports will increase further after mid-December, according to the report.
In general, it takes around two weeks for ore carriers from Australia to arrive at Chinese ports, Mysteel Global noted.
As for domestic iron ore, a modest recovery in the supply will be observed in December, as miners in North China’s Hebei and Shanxi provinces have gradually resumed normal operations beginning last month, according to the report.
Most mining companies in these two areas had earlier suspended their production to conduct government-mandated safety inspections after two accidents had occurred in September, as reported.
Mysteel’s regular survey showed that domestic production of iron ore concentrates among the 186 Chinese mining enterprises regularly monitored had climbed for the second survey period over November 18-December 1 to an average of 447,300 tonnes/day, up by 2,100 t/d on fortnight.
Meanwhile, just as China’s overall iron ore supply is seen loosening this month, ore demand among steelmakers will probably decline this month, the report pointed out.
“Steelmakers will further rein-in their steel output in coming weeks, should they see that low consumption of steel among end-users is leading their steel stocks to accumulate,” the report observed.
Stocks of the five major carbon steel products comprising rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate held by the 184 Chinese steel mills canvassed in Mysteel’s survey climbed by 0.3% on week to reach 4.31 million tonnes over December 1-7, the latest survey showed.
Regarding ore buying among steelmakers for the Chinese New Year holiday during January 21-27, the replenishment quantities will not be abundant this month given the mills’ thin margins, according to the report. “The steel producers’ poor steel margins will not improve much during winter, traditionally the off season for steel use,” it explained.
The increase in iron ore arrivals at ports while discharge rates stay low will doubtless cause imported ore inventories at Chinese ports to swell in December, the report said.
Total imported iron ore stocks at 45 Chinese ports under Mysteel’s survey grew to 133.8 million tonnes over December 2-8, rising by 1.1 million tonnes or 0.8% on week. The report estimated that the volume will reach about 141 million tonnes by the end of this month.
Written by Lea Li, liye@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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