China’s iron ore market will likely see growth in both supply and demand in April, though the market will still be mixed, according to Mysteel’s latest monthly report.
This month, some uptick in imported iron ore supply countrywide is expected, the report said, as shipments from major iron ore miners in Australia and Brazil have been gradually recovering from the lows reached in March.
Mysteel’s data showed that the total volume of iron ore shipped to global destinations from the 19 ports and 16 mining companies in Australia and Brazil had climbed to around 91.1 million tonnes over February 28-March 27, up 5.5 million tonnes or 6.4% from the volume over the previous four weeks spanning January 31-February 27. The growth in shipments is expected to continue this month.
Meanwhile, China’s domestic iron ore production is also forecast to recover further this month, with the limitations on miners’ operations imposed for the duration of the Winter Olympic and Paralympic Games being gradually relaxed, the report mentioned.
According to Mysteel’s survey, domestic iron ore concentrates output in March recovered to an estimated 21.5 million tonnes, or up 1.71 million tonnes on month.
On the other hand, iron ore demand from domestic steel producers is expected to strengthen further this month, propelled by the uptick in steel output. Most steelmakers are likely to substantially increase production after the current COVID19 outbreak is brought under control and steel demand from end-users gradually recovers.
Mysteel expects that daily molten iron output among the 247 Chinese steelmakers surveyed regularly will climb to an average of 2.35 million tonnes/day in April, compared with 2.3 million t/d on average over March 18-24.
The predicted rise in daily hot metal output reflects the steady operation resumption of blast furnaces, even though the volume in the subsequent week over March 25-31 retreated to 2.26 million t/y. That week, some mills had to scale back production when deliveries of steelmaking raw materials, especially those on trucks, were disrupted by the resurgence of the coronavirus.
Nevertheless, Mysteel’s report warned of lingering uncertainties in steelmakers’ production. For example, if the thin steel margins that many mills are currently enduring persist for much longer, many steelmakers will likely opt to reduce production.
In general, Mysteel predicts that the supply-demand gap in iron ore will narrow moderately this month, with the total inventories at China’s ports declining further. However, considering that total port inventories are still at a relatively high level and that stocks of mainstream iron ore products such as PB Fines, Newman Fines and Mac Fines – widely used by steelmakers – are higher now than at this time last year, any support that ore prices might receive from the narrowed supply-demand gap might be relatively limited.
Mysteel’s latest data showed that the stocks of imported iron ore at China’s 45 major ports had dipped to a two-month low of 153.9 million tonnes as of March 31, or down 4.6 million tonnes from the volume as of March 3.
Moreover, Mysteel’s report also suggests that the price premium of iron ore lumps and pellets against iron ore fines might ease further this month if the steel mills are slower at resuming production and the margins on finished steel margins remain low.
By March 31, Mysteel’s 62.5% Fe iron ore lump premium against 62% Fe Australian fines had declined to $0.307/dmtu from the previous 7.5-month high of $0.4715/dmtu reached on March 14, according to Mysteel’s assessments.
By the same day, Mysteel’s 63% Fe iron ore pellet premium against 62% Fe Australian fines had also dropped to $29.95/dmt. Earlier this month, the premium had climbed to $43.3/dmt on March 15 – the highest since November 19 2021.
Written by Victoria Zou, zyongjia@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint
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