Iron ore procurement price sees slight increase in China
Several steelmakers in
China announced increases last week in their
iron ore procurement prices.
A decline in the
iron ore inventories of the steelmakers prompted them to increase their procurement prices around RMB 30/ton. The steelmakers had reduced their
iron ore purchase quantities due to the stagnant market conditions and with the hope that
iron ore prices might see some softening. However, the local
iron ore producers and
iron ore importers preferred to stockpile their goods instead of selling at lower prices. Thus, the steelmakers were left with very little choice but to raise their procurement prices as their own inventories dwindled.
The price increases also come at a time when the steelmakers are preparing to engage in price talks with major Indian
iron ore producers.
Although the establishment of long-term contracts between Indian
iron ore producers and Chinese steelmakers is unlikely due to the fact that the Indian iron industry is highly scattered and some steelmakers in
India are against the exportation of Indian ore, Chinese steelmakers are determined to keep
India as a trump against
Australia and
Brazil.
Under these circumstances, the prices of
iron ore rose slightly over the past week in several of
China's domestic markets.
Current
iron ore procurement prices of major steelmakers vary between RMB 650-820 in northern
China, RMB 570-670 in northeastern
China, RMB 700-850 in eastern
China and RMB 680-750 in central
China.
In spot markets, the price of 65% Fe
iron ore in northeastern
China was around RMB 580/ton on Monday, unchanged from a week ago (August 29). The prices in northern
China increased around RMB 10/ton during the past week to an average RMB 670/ton. Prices in eastern
China remained constant at RMB 750-840/ton, while the prices in central
China increased RMB 20/ton over the week to reach RMB 500/ton for 59% Fe concentrate
iron ore.