Global iron ore prices decrease further
Having closed last week with a downward movement, prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port have decreased further by $1.25/mt on Monday, October 30, compared to last Friday, starting the current week at $58.4-59.1/mt CFR China. As of October 23, inventory of iron ore at 33 major Chinese ports amounted to 113.18 million mt, up 1.28 million mt or 1.14 percent compared to the inventory level recorded on October 16, as announced by China’s Xinhua News Agency.
Chinese steel mills were unwilling to restock as the result of the production cuts imposed during the 19th National Congress of the Communist Party of China held last week. During the congress, steelmakers’ iron ore purchases were negatively influenced by the restrictions on transportation activities and by the limitations imposed on steel producers and miners. In this context, global iron ore prices declined by 0.63 percent last week.
Meanwhile, it is observed that global iron ore prices have started the current week with a downward movement in the wake of new restrictions in Tangshan imposed on sintering and pelletizing activities amid the anticipated deterioration of air quality.
According to a Reuters report published today (Oct. 30), capacity utilization rates of blast furnaces across China have fallen to their lowest levels since 2012 at 71.13 percent. On the other hand, capacity utilization rates in Hebei – China’s top steelmaking province – have declined to 66.03 percent. Also, the country’s top steelmaking city Tangshan was ordered to make further cuts to steel production on October 24-27 as bad weather conditions were expected to cause a worsening of smog. As more strict measures are expected to be imposed in November to prevent pollution emissions in China, manufacturers in 28 cities in northern China are expected to be asked to cut their production rates.
Analysts of the financial service company Hongyuan Futures Co., Ltd report that steel output in China has been decreasing due to environmental measures, while demand is currently unstable as the traditionally peak season for construction activities is over. Additionally, analysts have indicated that raw material demand in China may decline further ahead of winter as steel mills will reduce their raw material inventories if productions cuts continue.
*This was published on SteelOrbis website on October 30, 2017.