Chinese iron ore production growing fast

SteelOrbis Shanghai The latest figures released by China Iron and Steel Association (CISA) indicated that the domestic iron ore production is in rapid growth. Chinese crude iron ore production for June reached 54.45 million mt, up 48 percent compared with the same period last year. The cumulative production from January to June totaled 246 million mt, up 35 percent year on year. Meanwhile, Chinese iron ore market remained quite stable throughout the week, with increasing pressure, especially for the imported ore. The market in northeastern China is quite stable. Although the local steel mills strictly control the purchase quantity and price, the mines still see smooth sales with less inventory pressure and strong prices, thanks to the relief in tight railway transportation, which resulted in the flow of supply to Shandong and middle south regions. Since some mines have not resumed production in northern China yet, the mines are not willing to sell at a low price level with the relatively tight iron ore supply, which caused the decline in inventory of some steel mills in Hebei district. The fine ore market in eastern China is also quite stable, but the market pressure increased. Hit by the supply from northeast, the markets in Shandong and other regions began to turn weak. Taking a “wait-and-see” attitude, many local mines sell only a small amount of ore over the current purchase price level, which was lowered by the steel mills recently. The imported ore price did not see an obvious decrease last week, but the commercial activity is very sluggish under the great pressures, leading to the evident shrinking in inquiry. By the end of the previous week, the total inventory of iron ore in China's twenty-three major ports is at 43.07 million metric tons, up 700,000 mt week on week. With the unsmooth sales of iron ore at domestic ports, the export quotation of India ore has also begun to go down. The FOB price of 63.5 percent ex-India fine ore is about $54/mt, while influenced by the beginning of decline in freight market, the CIF price is also beginning to go down. The price of ex-India ore from Paradip Port, India to Tianjin Port, China is around $70-71/mt CIF, while the price to Xiamen Port, China is only around $68-69/mt CIF. Overall, Chinese iron ore prices have been in a temporary stable trend, but, with the continuous finished steel price decline, the iron ore prices are still likely to see a decrease in short term.