Global iron ore prices witnessed a steep drop last week. Chinese spot iron ore fines Fe 62% prices opened at $134.20/t CNF China towards the beginning of last week and were assessed at $122.15/t, CNF China towards the weekend. Seaborne iron ore prices declined further on a bearish demand outlook.
As steel margins continued to face pressure due to the weak steel demand and rising coke prices, steel mills were heard to be lowering their buy tender prices for domestic concentrate.
The key factors that have pulled down prices are –
- Steep drop in futures: The most actively traded contract with DCE today tumbled to RMB 773/tonne, down by RMB 65/t against last week’s close.
- China’s billet prices slump towards weekend: Steel billet prices in China’s Tangshan witnessed a sharp fall of RMB 340/t ($51/t) w-o-w following a steep decline in rebar futures. Prices stood at RMB 4,180/t ($622/t), inclusive of 13% VAT, on 17 June.
- Mills opt for maintenance shutdowns: As the loss extended, the number of steel mills resorting to maintenance is on the rise. Last week, the blast furnace operating rate declined from the peak, stoking expectations that iron ore demand may fall significantly.
- Iron ore supplies remain supported: The mainstream iron ore supply is showing an obvious increase on a weekly basis, which is also another factor keeping prices under pressure.
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