Chinese iron ore market continues to climb steadily

SteelOrbis Shanghai Continuing its steady upward tendency, for the time being the Chinese iron ore market hasn't experienced any direct impact from the 9.5 percent increase in international iron ore prices for the 2007 fiscal year. On January 4, the price of 66-percent damp base iron ore in Tangshan was at RMB 580/mt ($74.4/mt) excluding tax excluded, while its price in Beipiao city of Liaoning Province was up RMB 10/mt ($1.3/mt) to RMB 470/mt ($60.3/mt) excluding tax. The price quotation of 63.5-percent India fine ore was at RMB 665/mt ($85.3/mt) at Tianjin Port, while the price at Qingdao Port was up RMB 5/mt ($0.6/mt) to RMB 645/mt ($82.1/mt). Finally, the price of Australian Hamersley 62- and 63-percent fine ore at Beilun Port was at RMB 640/mt ($81.9/mt), neutral week on week. China's domestic ore market showed stable movement over the past week, with a flat trading performance being observed. With regard to the northeastern region, it is quite difficult for local mines and dressing plants to maintain their normal production levels. Due to the frosty weather, iron ore powders usually freeze together while the water content is relatively high. With the improvement in transportation conditions, many northern mills have now begun to make purchases, resulting in the ore price increase in the northeastern market. Nevertheless, some distributors mentioned that the quantities purchased by the eastern mills saw a remarkable shrinkage because of the rise in transportation expenses. In northern China, market prices kept steady in recent days, with low inventories seen in most mills. Therefore, the mines are confident and optimistic about the future. As regards eastern China and the central-south areas, both markets saw stable performances. The local mines took advantage of the good weather conditions to increase production, thus contributing to the steady market movement. Compared with the domestic ore situation, the imported ore market saw an obvious rise, especially for low-grade ore prices. For instance, the price of 58-percent India fine ore was at RMB 505-510/mt ($64.7-65.4/mt) at Tianjin Port, up RMB 10-15/mt ($1.3-1.9/mt) week on week. According to the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters (CCCMC), the FOB price of 63.5-percent Indian ore is at $56/mt, up $2-3/mt compared with the previous weeks; meanwhile, the CIF price remains at $78/mt or due to the decrease in freight charges. According to the relevant statistics, on December 29, the total inventory of iron ore at China's twenty-three major ports amounted to 38.23 million mt, equal to the level of the previous week, but still sharply down compared with early December. In conclusion, the Chinese iron ore market is expected to see a continuous increase in the period ahead.