Over the past week market prices of both imported ore and domestic ore in China continued to be boosted by the soaring movement of the finished steel market. Meanwhile, due to the reduced shipments from the three global mining giants, spot supplies of imported ore are tight, thus providing firm support for market quotations. If finished steel prices maintain their high levels, further upward room for prices can be expected in the domestic iron ore market.
Product name | Specification | Average price (RMB/mt) | Price ($/mt) | Weekly change (RMB/mt) |
Iron ore concentrate | damp base (iron content: 66 percent) | 640 | 94 | 30 |
India fine ore | 63.5 percent | 760 | 112 | 50 |
The international shipping freight market climbed up slightly during the past week. On July 31, the Baltic Dry Index (BDI) closed at 3,445 points, up 38 points compared with the level on July 23. On July 30, the average freight charge from Brazil to Beilun Port in China was $38.02/mt, up by $1.39/mt week on week. Meanwhile, the average freight rate from Western Australia to Beilun on July 30 was $14.5/mt, up $0.293/mt week on week.
Over the past week iron ore prices in China's domestic market have continued their rising trend, with an obvious increase seen in imported ore prices. At present, the price of 66 percent damp base iron ore in Tangshan, Hebei Province is up by RMB 30/mt ($4/mt) to the level of RMB 640/mt ($94/mt, tax excluded), while the market prices in the northeastern regions stand at RMB 560/mt ($82/mt, damp base/tax excluded), up RMB 10/mt ($1/mt) week on week. Meanwhile, the prices of 63.5 percent Indian fine ore are at $80/mt FOB, while the CIF price (Tianjin Port) has risen by $5/mt week on week to $100/mt. Additionally, the price quotation of 63.5 percent Indian ore has increased by RMB 50/mt ($7/mt) week on week and is now at RMB 760/mt ($112/mt) at Chinese ports, while the deal price of 62.5 percent Australian PB fines has risen RMB 50/mt ($7/mt) to RMB 740/mt ($108/mt), with the market price of 65 percent Brazilian fine ore up by RMB 40/mt ($6/mt) to RMB 780/mt ($114/mt).
Following the soaring movement of China's finished steel market, imported ore prices in the domestic market have also surged strongly. With brisk demand for imported ore, the overall market has been characterized by tight availability and higher prices.
In the short term, there are several factors that will affect the future trend of imported ore prices. First of all, as a result of the sharp slump in shipments from the three global mining giants, new arrivals of materials have declined considerably at the main Chinese ports. Meanwhile, although most large-scale Chinese mills have sufficient iron ore stocks after their previous sourcing activities, inventory levels are relatively low at medium and small mills which generally purchase spot ore, thus leading to brisk commercial activity for spot materials in recent days. In addition, the China Iron and Steel Association is continuing its investigation into iron ore speculation, and so large mills are not allowed to sell materials to traders, escalating the liquidity problem in the iron ore market.
Overall, the continuous rise of finished steel prices is still the main source of upward momentum for the iron ore market. With sufficient capital availability, brisk demand and general optimism, the finished steel market is generally expected to remain on its uptrend in the near future. Therefore, most market players hold the view that imported ore prices will not halt their upward movement until September.