Imported iron ore inventory sees sharp rise in China

SteelOrbis Shanghai Over the past week, the mass arrival of imported ore resulted in a sharp increase in inventory at the ports. Nevertheless, prices remained stable because of the strong commercial activity, while prices of domestic ore continued to rise. On September 14, the price of 66 percent damp base iron ore in Tangshan increased RMB 10/mt ($1.3) to RMB 510/mt ($64.2) excluding tax, while that in Beipiao Liaoning province increased RMB 5/mt ($0.6) to RMB 420/mt ($52.9) excluding tax. The price quotation of 63.5-percent India fine ore is at RMB 640/mt ($80.6) at Tianjin Port, while the price at Qingdao Port is at RMB 630/mt ($79.3). The price of Australian Hamersley 63 and 64-percent fine ore at Beilun Port is at RMB 620/mt ($78.1). All these prices are equal to the levels of the previous week. The figures released by Chinese customs indicated that Chinese iron ore imports totaled 32.81 million mt in August, up 8.08 million mt or 37 percent compared with July. Cumulative imports from January to August amounted to 219 million mt, up 24.5 percent year on year. Moreover, Chinese iron ore in August totaled 53.71 million mt, up 3.46 million mt or 7 percent month on month. The cumulative production from January to August amounted to 350 million mt, up 36 percent year on year. In this way, the Chinese iron ore supply reached 86.52 million mt in August, seeing a rapid increase of 11.54 million mt or 15.4 percent compared with July.The even more rapid increase in demand, plus the climbing costs of imported ore, are pushing the iron ore market in a steadily upward trend. By the end of week 35, the total inventory of iron ore in China's twenty-three major ports is at 41.98 million mt, up 1.21 million mt week on week. Due to the brisk commercial activity, traders are confident about the market. Some traders have even hiked their quotations, expecting a further rise in the market. According to the situation at Tianjin Port, the market is abundant in fine ore, but is short of pellet and lump ore. Unlike the imported ore market, the domestic mines are not so confident. With the brisk demand, mines are making a good profit after the continuous price increase. In week 37, mines in northeastern and northern China are active in sales, contributing to the remarkable trading volume. However, in southern and middle China, due to insufficient local supply and the high costs of inflow supply, steel mills are still sticking to their “low-price purchase” policy, resulting in the bearish market performance. China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters (CCCMC) stated that the price of 63.5 percent ex-India iron ore import quotation to China was in $53-54/mt FOB, and in $71-72/mt CIF range last week. All in all, with the remarkable increase in supply, the Chinese iron ore market has moved steadily up since the beginning of September, reflecting the rapid rise in demand. In the short term, the iron ore market will continue its brisk performance. With domestic ore remaining stable, imported ore is expected to see further increases.