China’s prices for imported iron ore are likely to continue rising during the coming few weeks, driven higher by increased production among domestic blast furnace (BF) steelmakers, Mysteel’s latest report suggests. But swelling steel supplies may threaten ore prices later this month, it warns.
Iron ore prices enjoyed a substantial rebound in April, with domestic ore demand and the market outlook for the ferrous market both recovering, according to the report.
Mysteel SEADEX 62% Australian Fines settled at $116.7/dmt CFR Qingdao as of April 30, higher by $18.9/dmt or 19.3% on month, before climbing further to reach $118.3/t as of May 7.
Last month, domestic BF mills actively brought idled furnaces back online after seeing their margins improve, as reported. By the last week of April, daily hot metal output among the 247 BF steel producers under Mysteel’s regular tracking averaged 2.31 million tonnes/day, up by 3.2% from end-March.
Mysteel’s other survey shows that within this month, another 16 furnaces are scheduled to be reignited after maintenance work is completed, while only four are set to be blown out. This is expected to lead the daily average of hot metal production among the sampled 247 mills to increase further by some 2.33 million t/d this month, Mysteel estimates.
As such, the surveyed steelmakers’ iron ore consumption is likely to grow overall this month, providing firmer support for iron ore prices, according to the report.
However, demand for steel products among domestic end-users is unlikely to grow in parallel with steel supply and may even weaken in late May, as the steel market will be approaching the traditional slack period for steel consumption in summer by that time, Mysteel’s report cautioned.
If end-user industries fail to consume most of the steel being delivered to market, steel prices may retreat, which could cause prices of steelmaking raw materials including iron ore to soften, the report illustrated.
Meanwhile, supply of imported iron ore remains ample in China, another factor likely to weigh on ore prices this month, according to the report.
By May 7, the total stocks of ore piled at China’s 45 major ports under Mysteel’s tracking reached 146.4 million tonnes, higher by 15% compared to the same period last year.
Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and BigMint.