SteelOrbis Shanghai
Affected by the winter stock-building and the sharp drop in the quantity of imported ore, the Chinese domestic ore market has seen a remarkable increase with prices of imported ore remaining stable since October. In week 45, the domestic ore market moved steady with a slight rise in imported ore because of the considerable drop in imported ore inventory.
On November 9, the price of 66-percent damp base
iron ore in Tangshan was at RMB 560/mt ($71.2) excluding 13 percent VAT, while its price in Beipiao city of Liaoning Province was up RMB 10/mt ($1.3) to RMB 460/mt ($58.5) excluding VAT. The price quotation of 63.5-percent
India fine ore is at RMB 640/mt ($81.4) at Tianjin Port, while the price at Qingdao Port is at RMB 630/mt ($80.2). The price of Australian Hamersley 62- and 63-percent fine ore at Beilun Port is at RMB 630/mt ($80.2). All these latter prices are equal to the levels of the previous week.
Due to the decreased inventory, mines in the northeastern regions continued to raise their quotations throughout week 45, but most local mills took a wait-and-see attitude towards this situation, leading to the bearish
trading performance. Meanwhile, since it is difficult to transport the local
iron ore to other regions because of the snowy and rainy weather, mills are not eager to make purchases, waiting instead for the price to come back down.
The market in northern
China was on a stable trend. Influenced by the sharp slip in local
semis prices, most steel mills just stood aside, waiting to see the future market trend of
iron ore and finished steel. However, the mines stuck to their existing prices, resulting in the stalemate situation between the two parties.
Inventory of imported ore continued to see sharp drop. By the end of week 44, the total inventory of
iron ore in
China's twenty-three major ports amounted to 39.9 million mt, down 870,000 mt week on week. With decreased inventory, the price increase of domestic ore also contributed to the brisk commercial activity in low grade imported ore. If this situation continues, prices of imported ore are likely to go up, especially for low grade ore.
The latest figures released by
China's customs authorities indicate that
iron ore imports dropped sharply in October, totaling 21.97 million mt, down 300,000 mt or 1.3 percent year on year, and down 6.17 million mt or 22 percent month on month. Imports of
iron ore from January to October amounted to 269 million mt, up 21.7 percent from the same period of 2005. Remarkably, imports in October were not only lower than those of the previous month, but also lower than those of the same period last year.
The sharp decrease in
iron ore imports is an important reason for the recent rapid rise in Chinese
iron ore prices. Moreover, the stock-building for the winter by mills in the northeastern region is also one of the reasons. However, at present, the prices are equal to or even higher than those of imported ore. Therefore, domestic ore is unlikely to climb up in the future.