Climbing freight boosts Chinese iron ore sales

SteelOrbis Shanghai Prices in China's iron ore market continued to increase steadily throughout the week, especially in Tangshan and surroundings. Although imported ore prices at the ports remained unchanged, the commercial activities turned better. On August 17, the price of 66 percent damp base iron ore in Tangshan increased RMB 10/mt ($1.3) to RMB 490/mt ($61.5) excluding tax, and that in Beipiao Liaoning Province retained RMB410/mt ($51.4), excluding tax. The quotation of 63.5 percent India fine ore decreased RMB 5/mt ($0.6) to RMB 630/mt ($79) at Tianjin Port, and the price at Qingdao Port remained unchanged at RMB 620/mt ($77.8). The price of ex-Hamersley, Australia 63 and 64 percent fine ore at Beilun Port is at RMB 620/mt ($77.8), neutral week on week. The stable situation in both finished steel and semi finished steel markets made the steel mills gain more confidence in the market. They purchased large quantities of fine ore in order to supplement their inventories. Generally speaking, domestic ore prices were at a low level several weeks ago; therefore, steel mills purchased a lot of materials and boosted the iron ore prices. In northeastern regions, market prices increased week on week. After the price of domestic ore increased, the imported ore at the ports has gradually become more competitive compared to it. Throughout the week, imported ore prices fluctuated slightly and low grade ore prices were still strong, with obviously more improved commercial activities. While the rising demand has driven up the iron ore prices for new imports, the freight has also offered a strong support. The international freight has increased since the beginning of August. Baltic Dry Index (BDI) has now reached 3,755 points; the highest level in year 2006, and up 2.8 percent from the 3,654 points in the beginning of the previous week. The freight for Tubarao – Beilun/Baoshan increased $0.1/mt or 0.28 percent week on week to $36.114/mt. That for West Australia – Beilun/Baoshan increased $0.375/mt or 2.9 percent to $13.380/mt. By the end of the previous week, the total iron ore inventory at the twenty-three major ports in China was 41.70 million metric tons, up 1.2 million metric tons compared with the previous week. Despite the increase in inventories, Chinese iron ore prices are expected to continue increasing due to higher freight costs and expanding demand in steel markets.