Bearish week for Chinese iron ore

Bearish week for Chinese iron ore

The Chinese iron ore market was bearish this past week as prices remained steady and few transactions took place. By the close of trading on Thursday, November 10, the price of 66-percent damp base iron ore in Tangshan was RMB 520/mt ($64), excluding tax. The price of similar ore in Beipiao, Liaoning Province, was RMB 420/mt ($52), excluding tax. The above-mentioned prices were equal to those of the previous week. The price quotation of 63.5-percent India fine ore was RMB 650/mt ($80) at Tianjin Port, equaling that of the prior week, and the price at Qingdao Port was RMB 630/mt ($78), also unchanged. The price of Peru 65-percent pellet at Beilun Port was down RMB 10/mt ($1) to RMB 880/mt ($110). The iron ore market in China was in a stalemate as anticipated price increases due to miners’ renewed confidence had yet to materialize. The decline in finished products forced some steelmakers to cut their procurement prices. Miners were not eager to sell their products at these lower prices, which in turn led to a sluggish transaction situation. Broken down by specific region, there was not much market activity in Hebei because steelmakers such as Xuanhua Steel and Tangshan Guofeng Iron and Steel Company (Guofeng Steel) slightly cut their procurement prices. Shandong Province saw hardly any commercial activity. In northeastern China, concentrate prices remained weak but stable. Traders of concentrate products maintained “wait-and-see” attitudes and not many steelmakers went to purchase those products. Steelmakers’ low purchasing prices left little profit margins for traders. Thus, traders lost interest in doing business, resulting in softened commercial activity. Inventory at ports slightly picked up as new batches of imported iron ore arrived in China. Although the price quotations did not change much, the actual deal prices decreased slightly. This led to a weakening in imported iron ore prices. According to the latest statistics from China’s Ministry of Communications, in October, China’s major ports loaded and unloaded 21.974 million metric tons of imported iron ore, a year-on-year increase of 36.9 percent. The cumulative loaded and unloaded volume through the first ten months of the year is 219.171 metric tons, up 33.2 percent year on year. By the end of October, imported iron ore inventory in China’s main ports was 27.49 million metric tons. Despite the delay in taking delivery that still exists in some ports, the situation is becoming noticeably alleviated. This suggests that the demand for iron ore is increasing. Since the recent market condition has been difficult to grasp, traders indicate that both miners and steelmakers hold “wait-and-see” attitudes to see what actions each other will take. According to the latest statistics from Customs, in the first ten months of this year, the import volume of raw materials such as coal and iron ore kept going up sharply. Among other things, the import volume of iron ore was 220 million metric tons, up 32.2 percent, while that of coal was 20.70 million metric tons, up 43 percent. At this crucial period when international iron ore price negotiations are underway, the rapid increase in China’s iron ore import volume gives iron ore producers ammunition to support their argument that demand dictates an increase in price. SteelOrbis Shanghai