SteelOrbis Shanghai
The Chinese
iron ore market remained stable throughout the week. The commercial activities are brisk in northeastern
China, but sluggish in Hebei Province, while those in other regions are steady. Not many deals for imported ore were concluded due to the high price level. The
iron ore inventory at ports increased.
In northeastern
China, concentrate ore price did not change much after slight fluctuations. There, the inventory of steel mills is relatively low. Recently, the purchasing volume is high.
The Tangshan market still faces the pressures of downward trend. As there are plenty of products in Tangshan, the purchasing activity is not brisk. Some steel mills further slightly cut the purchasing prices of iron concentrate by around RMB 10/mt ($1).
As the market conditions did not get better, most miners are not that confident in the future of the market. The supply and demand of
iron ore are imbalanced as domestic miners started selling products one after the other, which may lead to a downward price trend.
The sluggish transaction volume of imported ore arrived recently in
China led to a sharp increase in inventory at ports. On April 7, the total inventory at twenty-three major ports was up 450,000 metric tons weekly at 39.25 million metric tons, among which 8.7 million metric tons are Indian ore.
According to
China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters (CCCMC), offers for 63.5 percent Indian fine ore are at $53-54/mt FOB, and $71-72/mt CIF. Analysts point out that the prices of domestic ore are lower than those of imported ore, and the price gap is expanding. At present, the price of domestic 66 percent dry base ore in Tangshan is at RMB 640/mt ($80) including taxes, while the truck loaded price of imported 63.5 percent damp ore is at RMB 625/mt ($77). Taking the
freight into account, steelmakers' purchasing cost of imported ore reaches RMB 700/mt ($87), much higher than domestic ore prices. Therefore, steelmakers are not willing to purchase imported ore.
The
iron ore price negotiation is still the focus point. Relevant person in
Baosteel stated that the negotiation has not yet involved the price, instead, both parties are still discussing the supply and demand relationship. Generally speaking, Australian ore miners have mild attitudes, while Brazilian CVRD is more aggressive. The
iron ore price negotiation is unlikely to come to an agreement in the short term. The delay is beneficial for Chinese mills.