SteelOrbis Shanghai
During the course of the past week, Chinese domestic ore prices started to climb up in some regions, accompanied by brisk commercial activity. Meanwhile, an increase was also seen in Australian and Brazilian ore prices at the ports, though Indian ore remained stable.
On April 26, the price of 66-percent damp base iron ore in Tangshan was up RMB 5/mt ($0.6/mt) to RMB 610/mt ($79.1/mt) excluding tax, while its price in Beipiao Liaoning Province remained constant at RMB 540/mt ($70/mt) excluding tax. The price quotation of 63.5-percent India fine ore was unchanged at RMB 805/mt ($104.4/mt) at Tianjin Port, while the price at Qingdao Port was at RMB 775/mt ($100.5/mt). Finally, the price of Australian Hamersley 62- and 63-percent fine ore at Beilun Port was RMB 770/mt ($99.9/mt), equal to the levels of the previous week.
Due to the elevated level of imported ore prices, the Chinese mills switched to stocking up domestic ore, thus driving up the iron ore prices in some regions. For example, in past weeks the northeastern iron ore market has seen continued stability and this has offered a remarkable price advantage compared with the rising prices of imported ore. In recent days, however, mills from eastern China made big purchases in the northeastern regions, causing tight availability of supplies in the local markets and consequently pushing up iron ore prices slightly in some regional markets. Some local mines estimate that the market prices may see a full-scale ascension in the near future. Meanwhile, in Hebei Province, the local mills also turned to buy domestic ore, boosting up local market prices. However, since the prices in eastern, central and southern China had seen relatively strong movement in previous weeks, the mills there only maintained normal trading activity, with local iron ore prices continuing at their comparatively high level with slight fluctuations.
Since the price system for the new fiscal year is effective for imported ore shipped as of April 1, the adjusted price now gains 9.5 percent compared with the previous level. At present, due to the successive arrivals of iron ore at the ports, CIF prices have seen a considerable increase compared to previous levels. The rise in freight charges, incidentally, has also contributed to this sharp increase. As a result, ore importers have begun to raise quotations for Brazilian and Austrailian ore, while the Indian ore price has remained stable on account of its previous strong upward movement. Therefore, such high imported ore costs have forced mills to control their purchases, with normal volumes of trading seen in the market.
By the end of the previous week, the total iron ore inventory at China's twenty-three major ports had amounted to 43.1 million mt, up 550,000 mt week on week. Sources report that many of them were imported from Mexico, Iran and Indonesia.
The figures released by Chinese customs show that China's March iron ore output totaled 56.52 million mt, up 24.1 percent year on year. Total first quarter output, meanwhile, reached 137.52 million mt, up 33.9 percent. The increase rate in March was sharply down 18.3 percentage points compared with the same period last year.
In March, China's iron ore imports rose 20.7 percent year on year to 35.62 million mt, while total Q1 imports totaled 100.21 million mt, up 23.9 percent.
Meanwhile, China's major import sources in March were: Australia with 12.11 million mt, up 11.3 percent year on year; India with 9.84 million mt, up 30.9 percent; and Brazil with 9.14 million mt, up 28 percent year on year.
In conclusion, in the period ahead domestic ore prices look set to rise, while imported ore is likely to move on a steady, upward trend.