Prices of imported iron ore in China will likely remain under downward pressure this month, as demand from Chinese steel mills may soften while iron ore supply may continue to loosen slightly, according to Mysteel’s latest iron ore monthly market analysis published on November 4.
On November 3, Mysteel’s SEADEX 62% Fe Australian Fines price index was assessed at $117.05/dmt CFR Qingdao, still $8.65/dmt below its October 9 level despite a recovery over the past several days. The same day, Mysteel’s PORTDEX 62% Fe Australian Fines price index dipped to Yuan 870/wmt ($130.3/t) FOT Qingdao and including the 13% VAT, still down Yuan 49/wmt from October 9 even though it too had rebounded recently.
On the supply side, the overseas iron ore volume newly arriving at China’s 45 ports may increase slightly from arrivals in October, as a result of the growing overseas iron ore supply, Mysteel predicted.
In fact, over June-September China’s iron ore import volume had stayed above the 100 million tonnes/month level, with the tonnage received in September totalling 108.5 million tonnes – the second highest monthly total in history, data from the country’s General Administration of Customs (CGAC) data showed.
Though official CGAC data for October is not yet available, Mysteel’s data suggests that last month, China’s 45 ports had received 108.85 million tonnes of new iron ore shipments as of October 27, with the total volume up 11.12 million tonnes up from that in September.
However, on the buying side, iron ore demand among China’s steelmakers may experience a further decline given that some steel mills, especially those in North China’s Hebei province, need to restrict their operations in response to local government schemes aimed at improving air quality during winter, the report said. Some mills in other areas are also scheduled to halt partial operations to conduct some routine maintenance this month or next.
For the time being, many steel mills in Hebei province’s steel production hubs of Tangshan and Handan have started to cut back their operations. Mills here had earlier endured a round of extensive curbs on their operations in the late October when air quality was forecast to be poor, as Mysteel reported.
Meanwhile, the continuing appreciation of the Yuan has seen the buying costs for seaborne cargoes ease markedly for Chinese traders and mills, exerting further downward pressure on spot ore prices, the analysis report noted. The Chinese currency has strengthened by 7% against the US dollar since May.
Consequently, for the current month prices of imported iron ore may fluctuate in the range of $110-120/dmt, Mysteel also noted from market sources. For the near term at least, prices may still have support from the robust demand for steel in the domestic market but any softening of the mills’ demand will lead iron ore stocks at ports to pile up, it warned.
The total of imported iron ore stocks at the 45 Chinese ports had risen for the tenth week over October 23-29 to a new eight-month high of 127.7 million tonnes, according to Mysteel’s latest data. However, at the same time, blast furnace capacity utilization among the 247 steel mills Mysteel checks regularly had gradually decreased to 92.47% over October 23-29 from the historical high of over 95% in mid-August.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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