SteelOrbis Shanghai
Due to the insufficient supply level, high-grade imported ore saw a considerable price increase at China's ports last week, while the prices of low-grade ore and domestic ore showed stable movement.
By the end of
trading on February 1, the price of 66-percent damp base
iron ore in Tangshan remained constant at RMB 590/mt ($76) (tax excluded), while its price in Beipiao Liaoning Province remained unchanged at RMB 475/mt ($61.2) (tax excluded). The price quotation of 63.5-percent
India fine ore was up RMB 20/mt ($2.6) to RMB 700/mt ($90.2) at Tianjin Port, while the price at Qingdao Port has risen RMB 15/mt ($1.9) to RMB 680/mt ($87.6). Finally, the price of Australian Hamersley 62- and 63-percent fine ore at Beilun Port was up RMB 20/mt ($2.6) to RMB 680/mt ($87.6).
Over the past week, high-grade imported ore saw a relatively sharp price increase at the major ports. Some traders explained that this resulted mainly from the low inventory level of high-grade ore at the ports. Generally speaking, in order to reduce costs, Chinese mills usually use as much low-grade ore as possible, leading to the comparatively small quantities of high-grade ore imports. Moreover, because of the previous big increase in their margin for low-grade ore, importers preferred to import low-grade ore, leading to a shortage of high-grade material. Sources report that the mills were not satisfied with the rising prices of high-grade ore and so reduced their purchases. However, due to the continuing insufficient supply levels, it seems difficult to stop this price increase trend.
With regard to low-grade imported ore, prices showed stable movement, accompanied by quite high inventory and a normal
trading performance.
Imported ore inventory saw a slight drop throughout the past week. By the end of the previous week, the total
iron ore inventory at
China's twenty-three major ports had already amounted to 39.79 million mt, down 1.9 million mt week on week. If the imported ore situation does not improve in the coming days,
China's
iron ore prices will continue to climb up.
As regards domestic ore, the market seemed very calm last week. On the one hand, the northeastern-based mills only made a very small amount of purchases, mainly consuming materials stocked in Q4 last year. On the other hand, most small mines have stopped
production. The large-scale mines still maintained
production, leading to increased inventory. However, they were merely preparing for post-holiday supplies and were not eager to sell.
In northern
China, affected by environmental protection measures, some medium and small mills stopped
production, resulting in reduced demand. However, since
iron ore is always in short supply in the local market, the mines are still optimistic about the future once the mills recover their
production. In eastern, southwestern, and southern
China, the markets maintained overall stability during the course of last week.
China's
iron ore market has seen alternating increases for both domestic ore and imported ore since November 2006 when mills in the northeast started their winter stock purchases.
Looking to the period ahead, the price increase for high-grade ore can be expected to further drive up
China's
iron ore prices.