According to a new report issued by the China Iron and Steel Association (CISA), as of February 29 this year imported iron ore inventory at Chinese ports totaled 122 million mt, decreasing by 1.48 percent compared to January 31. Demand and supply in the iron ore market remained basically stable.
According to the CISA, as of March 6 the composite steel price index (CSPI) for the Chinese market was down 8.4 percent year on year to 99.61 points. However, the import iron ore price was at $88.6/mt, up by $4.45/mt or 5.29 percent year on year and rising by $5.21/mt or 6.26 percent month on month. The divergence of the trends of import iron ore prices and steel prices indicates that iron ore prices will likely move down to more reasonable levels.
In February this year, the average aggregate daily crude steel output of large and medium-sized steel enterprises in China - all CISA members - totaled 1.8624 million mt, down 5.44 percent compared to January. Though the spread of the coronavirus has been brought under control in China, the full-scale resumption of production and construction activities of downstream users will take more time and so steel output will see slow growth or decline, which will drag down demand for iron ore. Moreover, steelmakers will take the initiative in reducing output to deal with the slack demand situation.
Accordingly, the CISA foresees that iron ore prices will likely edge down in the coming period.