Prices for imported iron ore in China finished the December 1-5 week at odds, with portside prices ending lower and seaborne sneaking higher, the latest Mysteel index data shows. But this week will likely see both decline as the supply surplus persists and demand softens, market sources say.
By December 5, Mysteel PORTDEX 62% Australian Fines in Qingdao had dropped by Yuan 7/wmt ($1/wmt) on week to Yuan 790/wmt FOT and including the 13% VAT, while Mysteel SEADEX 62% Australian Fines inched up by $1/dmt on week to $105.7/dmt CFR Qingdao.
“The small growth of Australian fines prices in the seaborne market last week was mainly supported by solid demand,” a market watcher said, adding that medium-grade fines such as PB fines were still popular among steelmakers.
Nonetheless, the pressure on prices for imported iron ore persisted, as the gap between demand and supply of the commodity continued to widen, the market watcher observed.
On the demand side, a further reduction in hot metal production among the integrated mills presaged softening ore demand. For instance, daily hot metal output of the 247 Chinese blast furnace steel producers under Mysteel’s regular survey fell for the third straight week during the sample week to average 2.32 million tonnes/day, down by another 23,800 t/d or 1% on week.
Accordingly, these mills’ daily consumption of imported iron ore during the same period also slipped by 1.5% on week to 2.85 million t/d on average.
Steelmakers have been cautious about purchasing iron ore in the portside market recently, with most only restocking a modest tonnage every day to meet their immediate production needs, a market source observed.
Meanwhile, the supply of iron ore in the domestic market has loosened further, with the stockpile of imported ore at the 45 major ports nationwide monitored by Mysteel rising by another 0.6% on week to 153 million tonnes as of December 4.
Should the drop in hot metal production continue this week and squeeze iron ore demand further, the supply glut in China’s iron ore market is likely to intensify and weigh on import ore prices, an iron ore analyst based in Shanghai warned.