In the wake of their previous climbing trend, market prices of imported ore in China gradually calmed down over the past week and started to indicate stable movement, with a minor rise being observed in domestic ore prices. With the iron ore contract talks between the giant mining companies and the Chinese side still in stalemate, the China Iron and Steel Association (CISA) has stated that China is prepared for an eventual breakdown of the talks.
Product name | Specification | Average price(RMB/mt) | Price ($/mt) | Weekly change (RMB/mt) |
Iron ore concentrate | damp base (iron content: 66 percent) | 540 | 79 | 20 |
India fine ore | 63.5 percent | 590 | 86 | 10 |
On account of the reduced iron ore shipments from the Australian mines, the international shipping freight market began to decrease in the past week. On June 11, the Baltic Dry Index (BDI) closed at 3,452 points, down 839 points compared with the level on June 3. On June 11, the average freight charge from Brazil to Beilun Port in China was $38.13/mt, down by $8.37/mt compared with the level on June 3. Meanwhile, the average freight rate from Western Australia to Beilun on June 11 was $21.16/mt, down $4.68/mt compared with the rate on June 3. In addition, the freight cost of Indian ore to China's major ports on June 11 was at $15.42/mt, a slight rise of $0.72/mt compared with the level on June 3.
Last week, domestic fine ore prices in China registered a minor increase, while the imported ore market indicated greater stability after its previous continuous climbing movement. At present, the price of 66 percent damp base iron ore in Tangshan, Hebei Province is at the level of RMB 540/mt ($79/mt, tax excluded), while the market prices in the northeastern regions stand at RMB 460/mt ($67/mt, damp base/tax excluded), both up by RMB 10-20/mt ($1-3/mt) week on week. Meanwhile, the prices of 63.5 percent Indian fine ore are up slightly to $59/mt FOB, while the CIF price (Tianjin Port) is at $75/mt. Additionally, the price quotation of 63.5 percent Indian ore has increased by RMB 10-20/mt ($1-3/mt) and is now at RMB 590/mt ($86/mt) at Chinese ports, while the deal price of 62.5 percent Australian PB fines has risen RMB 20/mt ($3/mt) to RMB 600/mt ($88/mt), with the market price of 65 percent Brazilian fine ore up RMB 10/mt ($1/mt) to around RMB 650/mt ($95/mt).
In recent days the prices of imported ore have gradually lost their momentum for further upward movement. Considering the relatively high quotations of iron ore at the ports, and also taking into account the sufficient iron ore stock levels at the mills, Chinese buyers do not seem eager to make purchases, leading to a shrinkage in market demand to a certain extent. In addition, shipping freight costs have recorded a considerable correction after their previous upward surge, and this has also affected market confidence. Currently, the price gap between domestic ore and imported ore is narrowing continuously. If the imported ore prices continue to rise, Chinese mills are likely to increase their interest in domestic ore. Looking at the current situation, the Chinese iron ore market is expected to indicate a general stability over the coming period, as the final outcome of the iron ore talks is awaited.