Chinese iron ore prices dropped again

SteelOrbis Shanghai The overall downward trend in Chinese steel market has finally influenced the very upstream side of the steel industry. Chinese iron ore prices decreased by a big margin throughout last week, also leading to a decline in imported Indian ore quotation. Under the pressure of costs, some ore dressing plants have stopped production. On August 3, the price of 66 percent damp base iron ore in Tangshan was RMB 480/mt ($60.2) excluding tax, down RMB 10/mt ($1.3) week on week, and that in Beipiao Liaoning Province was RMB 400/mt ($50.2) excluding tax, down RMB 15/mt ($1.9). The price quotation of 63.5 percent ex-India fine ore retained RMB 640/mt ($80.3) level at Tianjin Port, and dropped RMB 5/mt ($0.6) to RMB 615/mt ($77.2) at Qingdao Port. The price of Australian Hamersley 63 and 64 percent fine ore at Beilun Port dropped RMB 20/mt ($2.5) to RMB 620/mt ($77.8). After the continuous price decrease in finished steel market, the prices of various products are close to or even lower than their production costs. Being unable to afford the loss, some steel mills had to reduce or even stop production, which caused to the slowdown in iron ore demand growth. On July 27, some southern steel mills held a coordination meeting on raw material purchase at Lianyuan Steel premises. Since the current steel market is quite weak, in order to relieve the cost pressure of raw materials, the representatives of Shaoguan Steel and other steel mills decided to lower the iron ore prices in Hubei, Anhui, Jiangxi, and Eastern Guangdong by RMB 20-40/mt. New prices were lower than those in Hunan and Northern Guangdong, impairing the confidence of local mines and traders. Meanwhile, the growth in imported ore demand also slowed. Although the quotation did not change, there was almost no deal for iron ore at Tianjin Port throughout last week. At Beilun Port, some traders began to sell their products at a lower price level as they were not optimistic about the future market. With the sluggish commercial activity at ports, the export prices of Indian ore also began to decrease. Recently, the spot price of Indian fine ore to China decreased by approximately $1/mt. The lowest FOB price of 63.5 percent ex-India fine ore is $50/mt, and the CIF price is $66-68/mt. By the end of the previous week, the total inventory of iron ore in China's twenty-three major ports was 41.53 million metric tons, up 1.23 million mt week on week. Some independent ore dressing plants can not afford the high cost of iron ore, with the ascending water and electricity costs; therefore, they had to stop the production one by one. In short term, Chinese iron ore prices will wave in a small range, possible with a slight decline.