Chinese iron ore market stands firm

SteelOrbis Shanghai The Chinese iron ore market continued on its stable trend over the past week, with a slight increase seen in some regions. Meanwhile, in spite of the rapid rise in inventory at the ports, the prices of imported ore did not see any changes. On January 25, compared to one week ago, the price of 66-percent damp base iron ore in Tangshan remained constant at RMB 590/mt ($75.9) (tax excluded), while its price in Beipiao Liaoning Province remained unchanged at RMB 475/mt ($61.1) (tax excluded). The price quotation of 63.5-percent India fine ore was constant at RMB 680/mt ($87.5) at Tianjin Port, while the price at Qingdao Port was RMB 665/mt ($85.6). Finally, the price of Australian Hamersley 62- and 63-percent fine ore at Beilun Port was RMB 660/mt ($84.9), equal to the level of the previous week. Continuing the price trend of the week before, Chinese iron ore prices showed steady movement last week, with a normal trading performance being observed. Due to the tight supply in eastern China, the local mines hiked their prices by RMB 20-30/mt ($3-4), and this price increase was accepted by the mills. In northern China, following the mining accident in Inner Mongolia on January 17, the government tightened safety measures for mines. 116 mines in Baotou, Inner Mongolia had to shutdown and wait for approval from the relevant safety authorities. In order to ensure safe production before the Spring Festival (18-25 February), the provincial government in Hebei implemented strict measures to control the dynamite supply to medium and small mines, leading to a considerable reduction in output. As a result, the supply shortage situation was aggravated and some local markets saw their prices increase by a certain margin. Excepting the above markets, prices in the northeastern, central-south, southwestern, northwestern and other regions remained constant. Throughout the past week, since a great deal of imported ore arrived in the country, inventory at the ports jumped up dramatically. By the end of the previous week, the total iron ore inventory at China's twenty-three major ports had already amounted to 41.69 million mt, up 1.54 million 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 remained unchanged at $58-59/mt, while the CIF price was at $82-83/mt. The prices of imported ore still performed firmly despite the rapid rise in inventory at ports. The latest figures issued by China Iron & Steel Association shows that China's crude ore output in 2006 totaled 588.17 million mt, up 161.94 million mt or 38 percent year on year. Meanwhile, ore imports reached 326.3 million mt, up 51.17 million mt or 19 percent, indicating a sharp decline in growth. Finally, pig iron output totaled 337.41 million mt, up 66.76 million mt or 20 percent. Based on these figures, we see that China's domestic iron ore was mostly used in pig iron production.