Imported Indian iron ore prices surge in China

Still maintaining a strong performance, market prices of imported ore at Chinese ports surged considerably over the past week, against the background of continuously climbing export quotations of Indian ore. Meanwhile, the Chinese domestic ore market continued its rising trend, accompanied by normal trading volume levels.

The international shipping freight market recorded a fluctuating movement during the past week. On July 23, the Baltic Dry Index (BDI) closed at 3,407 points, up 83 points compared with the level one week earlier on July 16. On July 22, the average freight charge from Brazil to Beilun Port in China was $36.63/mt, down by $3.83/mt week on week. Meanwhile, the average freight rate from Western Australia to Beilun on July 22 was $14.21/mt, down $1.13/mt week on week.

Over the past week iron ore prices in China's domestic market have continued their rising trend. At present, the price of 66 percent damp base iron ore in Tangshan, Hebei Province is at the level of RMB 610/mt ($89/mt, tax excluded), while the market prices in the northeastern regions stand at RMB 550/mt ($81/mt, damp base/tax excluded) - an overall rise of RMB 20-30/mt ($3-4/mt). Meanwhile, the prices of 63.5 percent Indian fine ore are at $72/mt FOB, while the CIF price (Tianjin Port) has risn by $5/mt week on week to $94/mt. Additionally, the price quotation of 63.5 percent Indian ore has increased by RMB 30/mt ($4/mt) week on week and is now at RMB 710/mt ($104/mt) at Chinese ports, while the deal price of 62.5 percent Australian PB fines has risen RMB 10/mt ($1/mt) to RMB 690/mt ($101/mt), with the market price of 65 percent Brazilian fine ore up by RMB 10/mt ($1/mt) to RMB 740/mt ($108/mt).

Last week, market prices of imported ore at Chinese ports surged considerably, with the export quotations of 63.5 percent or 63 percent Indian ore soaring to the level of $95/mt CFR or even above. It is said that Indian ore is now generally offered above the level of $95/mt, which means that the import cost of 63.5 percent Indian fine ore in China is close to RMB 800/mt ($117/mt). Looking at the current situation, commercial activity for imported ore has seemed relatively slack in recent days, since neither local traders nor local mills dare to buy in materials at such a high price level. As regards the future, the decisive factor for the future trend of the iron ore market is whether finished steel prices still retain momentum for a further ascension. If steel prices continued to show a strong performance, then export quotations of Indian ore and spot ore prices in the Chinese domestic market will both climb up further.

In addition, although domestic ore prices have continued their upward movement in recent days, a bigger increase has been observed in imported ore prices. Thus, spot prices of imported ore at the ports are now about RMB 30/mt ($4/mt) higher than market prices of domestic ore, meaning that imported ore does not possess any price advantage. It is heard that some northern-based mills are starting to plan purchases of domestic ore, and this may have some impact on the imported ore market in the near future.