China iron ore recovers from four-day loss on lower shipments and arrivals, outlook remains bleak

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Benchmark iron ore futures on China’s Dalian Commodity Exchange recovered from four consecutive sessions of losses on Tuesday, gaining over 1 per cent on falling shipments from major suppliers.

The most-traded iron ore contract on the Dalian Commodity exchange, for January delivery, gained as much as 1.3 per cent to hit 718 yuan ($111.26) per tonne in the morning session on Tuesday, before closing the morning session at 714 yuan per tonne.

Spot prices of iron ore with 62 percent iron content for delivery to China , compiled by SteelHome consultancy, were unchanged at $123 per tonne on Monday from the previous session.

Iron ore shipments that departed from 19 major ports in Australia and Brazil to global destinations reached 23.54 million tonnes in the week ended October 17, falling by 589,000 tonnes from the previous week, data from Mysteel consultancy showed.

In breakdown, shipments from Australia reached 17.66 million tonnes, rising by about 616,000 tonnes, and that included 13.92 million tonnes shipped to China, falling by 1.32 million tonnes, showed the data. Shipments from Brazil reached 5.88 million tonnes, down 1.2 million tonnes week on week, according to Mysteel.

Iron ore arrivals in China’s 45 major ports reached 22.6 million tonnes during the week, falling by 1.94 million tonnes from the previous week, according to Mysteel. Arrivals at the six major ports in North China reached 11.48 million tonnes, down 2.1 million tonnes from the previous week, showed the data.

The world’s largest miner BHP Group said on Tuesday that its iron ore output fell by nearly 5 per cent in the first quarter 2022. Last week, Rio Tinto downgraded its 2021 iron ore shipments forecast due to tight labor market. 

Other steelmaking ingredients extended gains on the Dalian bourse. Coking coal jumped 3 percent to 3,807 yuan a tonne, and coke futures surged 7.1 percent to 4,502 yuan per tonne.

Steel rebar on the Shanghai Futures Exchange , used in construction sectors, inched up 0.5 percent to 5,449 yuan a tonne. Hot rolled coils increased 0.5 percent to 5,700 yuan per tonne. Shanghai stainless steel futures fell 0.7 percent to 20,700 yuan a tonne.

Analysts say that the outlook for iron ore demand remained bleak due to the national campaign to reduce crude steel output and the expectation production restrictions in the upcoming heating season.

Iron ore inventories at Chinese ports are increasing further. Separate data from Mysteel showed that iron ore inventory at China’s 45 main ports reached 141.2 million tonnes as of on Monday, rising from 139 million tonnes last Thursday and 135.6 million tonnes on Monday last week.

As of October 14, operating rate of blast furnace in China’s 247 major steelmakers stood at 78.07 per cent, rising by 0.55 per cent from the previous week, down 10.34 per cent from the same period last year, according to 100ppi, a Chinese commodity information provider.