The Chinese iron ore market has continued its ascending movement during the past week. As a result of the reduced spot ore supplies from the three iron ore mining giants since mid-June, Chinese ports have recently seen limited arrivals of new supplies, and so prices of Indian ore have climbed up rapidly. Meanwhile, the China Iron and Steel Association (CISA) has had to face growing pressure with the international iron ore talks still in stalemate.
Product name |
Specification |
Average price(RMB/mt) |
Price ($/mt) |
Weekly change (RMB/mt) |
Iron ore concentrate |
damp base (iron content: 66 percent) |
590 |
86 |
10 |
India fine ore |
63.5 percent |
660 |
97 |
20 |
The international shipping freight market slumped again during the past week. On July 10, the Baltic Dry Index (BDI) closed at 3,018 points, down 724 points compared with the level one week earlier on July 2. On July 9, the average freight charge from Brazil to Beilun Port in China was $32.56/mt, down by $13.84/mt week on week. Meanwhile, the average freight rate from Western Australia to Beilun on July 9 was $13.71/mt, down $4.04/mt or 23 percent week on week. In addition, the freight cost of Indian ore to China's major ports on July 9 was at $17.11/mt, a slight decline of $0.23/mt compared with the level on July 2.
Over the past week iron ore prices in China's domestic market have continued their uptrend. At present, the price of 66 percent damp base iron ore in Tangshan, Hebei Province is at the level of RMB 590/mt ($86/mt, tax excluded), while the market prices in the northeastern regions stand at RMB 510/mt ($74/mt, damp base/tax excluded), both up by RMB 10/mt ($1/mt) week on week. Meanwhile, the prices of 63.5 percent Indian fine ore are at $66/mt FOB, while the CIF price (Tianjin Port) is up by $5/mt to $85/mt. Additionally, the price quotation of 63.5 percent Indian ore has increased by RMB 20/mt ($3/mt) and is now at RMB 660/mt ($97/mt) at Chinese ports, while the deal price of 62.5 percent Australian PB fines has risen RMB 20/mt ($3/mt) to RMB 640/mt ($95/mt), with the market price of 65 percent Brazilian fine ore up by RMB 50/mt ($7/mt) to RMB 720/mt ($105/mt).
According to the latest statistics released by the CISA, China's crude steel production in June totaled 45.387 million mt, with the average daily steel output reaching 1.5129 million mt - the highest level for any month so far this year. In general, the continuing strong expansion of China's crude steel production looks certain to stimulate domestic consumption of iron ore.
The recent supply and demand relationship in China's domestic iron ore market has been greatly impacted by the continuing fluctuation of shipping freight costs. In comparison to the iron ore talks, international shipping freight charges have a greater influence on the purchasing costs of the steel mills. Since the long-term contract prices are on FOB basis and since the steel mills still need to pay for the shipping costs of iron ore to the destination, it can be meaningless to obtain low FOB prices if the shipping freight costs soar too high. Last year, when the international shipping market surged, the freight cost accounted for more than 58 percent of the total cost of importing Brazilian ore to the Chinese ports.
Boosted by the surge in domestic finished steel prices, Chinese mills' demand for iron ore has indicated a certain growth, but most of the mills still purchase only according to their needs. In addition, affected by the reduced spot ore supplies from the three iron ore mining giants, market quotations of Indian ore have registered a remarkable increase in recent days.