SteelOrbis Shanghai
Chinese
iron ore market remained weak last week, with little sales, growing inventories at ports and incomplete international
iron ore price talks. Yet, imported ore sales may become brisker as transportation fees are to increase in June.
Flat steel prices of steelmakers increased largely in the last few weeks in
China, but domestically produced
iron ore prices failed to record a similar increase. Domestic
iron ore is mostly used for the
production of long products and strip. Therefore, it was rather influenced by the sluggish business activity of strip steel and section steel markets.
Iron ore inventories of most Chinese mills are high. Furthermore, steel mills' previous orders for imported
iron ore have started to arrive one after the other. The increase in inventories led some steel mills, especially in North and East
China, to cut their
iron ore procurement prices incrementally, resulting in larger pressure on domestic
iron ore market. Meanwhile, some miners are also unwilling to sell their products due to the current sluggish market and preferring to pile up their inventories instead.
Iron ore market in South
China is rather stable. On April 24, fifteen iron and steel companies in South
China held a meeting on the raw material procurement prices. The meeting participants think that there is not much room for
iron ore prices to decrease, as the current prices have been already low. In this region, steel mills are willing to purchase products actively.
The imported ore market is gloomy either. On April 24, the
iron ore inventory at
China's 23 major ports totaled 40.61 million metric tons, up 400,000 metric tons from a week ago. Among the total, Indian ore increased 480,000 metric tons week on week to 9.28 million metric tons.
The transaction volume of imported ore has not recovered. It is not easy for Indian ore at Tianjin Port to get a favorable sales figure. The transaction volume of low iron content ore, which sells well before, is not satisfying. The commercial activities at Rizhao and Lanshan Ports are not optimistic either. The inventory at Rizhao Port is extremely large. The transportation fee in Hebei will be increased starting from June 1; therefore, the transportation cost of steel mills will rise RMB 30/mt ($4), which may lead commercial activities for imported ore to become brisker before June.
According to
China Chamber of Commerce of Minerals and Chemicals (CCCMC), offers for 63.5-percent Indian fine ore are at around $53-54/mt FOB, and $70-71/mt CIF.
The fifth round of international
iron ore price negotiation will be held soon.
Baosteel and
China's Iron and Steel Association (CISA) expressed their unwillingness to accept the price increase, however, the CVRD Company still insist in raising
iron ore prices by 24%, otherwise, it will consider selling
iron ore in spot market.