The Chinese iron ore market was still characterized by bearishness over the past week. Due to the relatively high cost level of domestic fine ore, a growing number of mills have in past months begun to prefer imported ore. In this context, China's iron ore imports in January-March this year reached 130.39 million mt, marking an all-time quarterly record.
Weekly change (RMB/mt)
Iron ore concentrate
damp base (iron content: 66 percent)
India fine ore
In recent days, the international shipping freight market reentered a sluggish phase. By the end of trading on April 9, the Baltic Dry Index (BDI) had been declining for 21 consecutive trading days, reaching 1,463 points, which represents a decrease of over 36 percent compared with last year's peak of 2,298 points.
On April 9, the average freight charge from Brazil to Beilun Port in China was $16.35/mt, up by $0.93/mt compared with the level on April 2. Meanwhile, the average freight rate from Western Australia to Beilun on April 9 was $6.26/mt, slightly down $0.24/mt compared with the rate on April 2. In addition, the freight cost of Indian ore to China's major ports was at $11.02/mt, a minor rise of $0.4/mt week on week.
Last week, China's domestic iron ore market remained soft. At present, the price of 66 percent damp base iron ore in Tangshan, Hebei Province is down RMB 10/mt ($1/mt) to RMB 500/mt ($73/mt, tax excluded), while the market prices in the northeastern regions are at the level of RMB 450/mt ($66/mt, damp base/tax excluded). Meanwhile, the prices of 63.5 percent Indian fine ore are at $54/mt FOB, while the CIF price (Tianjin Port) is around $63-64/mt. Additionally, the price quotation of 63.5 percent Indian ore is at the level of RMB 550/mt ($81/mt) at Chinese ports, while the deal price of 62.5 percent Australian PB fines has remained constant at RMB 550/mt ($81/mt), with the deal price of 65 percent Brazilian fine ore at around RMB 600/mt ($91/mt).
According to the statistics released by the customs authorities, China's iron ore imports for March totaled 51 million mt, up 4.26 million mt month on month, with the total January-March imports reaching 130.39 million mt - both figures representing historical monthly and quarterly highs.
Due to the mistaken estimates previously made by Chinese traders as regards the domestic market, and also due to the heightened sales promotion efforts of Rio Tinto and other suppliers, China's iron ore imports registered a sharp jump in recent days. Currently, iron ore inventory levels at the Chinese ports are again approaching the level of 70 million mt. Thus, given the production cuts implemented by the mills, there is an increasingly acute imbalance between the high iron ore inventory levels and the demand coming from the mills.
Looking at the current situation, due to the relatively high cost level of domestic fine ore, a growing number of Chinese mills now prefer imported ore. The share of domestic ore purchases is reported to have declined from 60 percent to 30 percent over the past six months. Furthermore, given the deteriorating market situation, more and more domestic mines are expected to suspend their operations.
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