Iron ore demand intensity in China will fall further amid continuous drops in steel market prices and lower steel outputs, the China Iron and Steel Association (CISA) said in its monthly report published on its official website.
Chinese iron ore demand slackens amid slower steel production
China's daily crude steel output fell for the third month in a row in December last year to 2.01 million mt, down 0.17 million mt or 7.77 percent compared to September of the same year. The China Iron and Steel Association (CISA) reported in January that its member steel companies produced 1.66 million mt of crude steel per day in the first twenty days of January, down 2.49 percent from December, while it added that accordingly China's demand for iron ore is unlikely to improve.
Iron ore oversupply still prevails in China
The growth of iron ore supply in China has far exceeded the demand for iron ore for iron production in China, the China Iron and Steel Association (CISA) has stated. China produced 708.97 million mt of pig iron in 2013, up 41.64 million mt or 6.24 percent from 2012, equivalent to an increase of 67 million tons in demand for finished iron ore. During the same period, Chinese raw ore output increased by 131 million mt, equivalent to 40 million mt of finished iron ore, rising to 1.45 billion mt, while China's imports of iron ore rose by 75.81 million mt or 10.19 percent year on year to 819 million mt.
At the end of January this year, iron ore at Chinese ports increased by 23.16 million mt or 33.04 percent year on year or by 9.5 million mt or 10.72 percent month on month to 98.12 million mt, according to the CISA.
Iron ore price to fall
In 2013, the 86 member steel companies of the China Iron and Steel Association (CISA) achieved an aggregate profit of RMB 22.886 billion and an overall profit margin of 0.62 percent, but the companies' steelmaking business still incurred a loss when their non-steelmaking business is excluded, according to the CISA.
The CISA's Complex Steel Price Index (CSPI) averaged at 102.76 points in 2013, down 8.6 percent from 2012, while average iron ore prices in 2013 rose by $0.28/mt or 0.22 percent year on year to $129.03/mt.
The CSPI fell 1.5 percent in January this year to 97.65 points, the lowest level since May 2009. Chinese domestic iron ore prices fell by RMB 21.87/mt or 2.39 percent to RMB 894.99/mt at the end of January, while overseas iron ore prices declined by $8.51/mt or 6.49 percent to $122.67/mt CIF, according to the CISA.
Source: www.steelhome.cn/en, China steel information centre and industry database