Influenced by the overall drop in China's domestic finished steel market, the domestic iron ore market has indicated signs of weakness in the past week. Currently, market demand is sluggish, while imported iron ore prices have declined. Due to the national policy of restricting industries of high-energy consumption, steel production in some regions have been impacted, and so market demand for iron ore will likely slow down.
Product name | Specification | Average price (RMB/mt) | Price ($/mt) | Weekly change (RMB/mt) |
Iron concentrate | damp base (iron content: 66 percent) | 940 | 139 | - |
India fine ore | 63.5 percent | 1,160 | 171 | -20 |
As regards international freight rates, on August 26, the Baltic Dry Index (BDI) closed at 2,703 points, up 59 points compared with last week. On the same day, the average freight charge from Brazil to Beilun port in China was $26.57/mt, down by $0.62/mt week on week. Meanwhile, the average freight rate from Western Australia to Beilun on the same date was $10.33/mt, slightly down by $0.14/mt compared with the level in the previous week.
Over the past week prices of imported iron ore in China declined slightly, with domestic iron ore prices basically stable. At present, the price of 66 percent damp base iron ore in Tangshan, Hebei Province is at the level of RMB 940/mt ($139/mt, tax excluded), while the market prices in the northeastern region stand at around RMB 830/mt ($122/mt, damp base/tax excluded), unchanged week on week. Meanwhile, quotations of 63.5 percent Indian fine ore are at $135/mt FOB, while the CFR price (Tianjin Port) is at $155/mt, down $5/mt compared with a week ago. Current mainstream quotations of 63.5 percent Indian ore at domestic ports are standing at RMB 1,160/mt ($171/mt), down by RMB 20/mt ($3/mt) week on week. Meanwhile, the deal price of 62.5 percent Australian PB fines is RMB 1,150/mt ($169/mt), down by RMB 20/mt ($3/mt), with the market price of 65 percent Brazilian fine ore at RMB 1,240/mt ($182/mt), decreasing by RMB 20/mt ($3/mt) week on week.
China's iron ore market showed some weakness in the week in question, with the import prices of iron ore falling a little due to lower finished steel prices in the domestic market. In addition, the implementation of the central government policy for controlling high-energy consumption industries is a factor leading to the reduction of iron ore demand. It has been reported that in the southern regions of China, such as in Jiangsu Province, most high-energy consumption enterprises have suspended or reduced production, while punitive electricity charges are to be imposed on all such enterprises in Hebei Province. In this context, demand for iron ore is bound to be negatively affected
Looking at the current market situation, the weakness in finished steel prices is the main factor affecting the domestic iron ore market. Currently, quotations of 63.5/63 percent iron ore from India to China have dropped to around $155/mt CFR and neither traders nor steel mills are interested in this level.