According to a new report issued by the China Iron and Steel Association (CISA), as of May 31 this year imported iron ore inventory at Chinese ports totaled 124 million mt, decreasing by 7.66 percent month on month. Though the iron ore inventory continued to see the month-on-month decline, the decreasing pace slowed down, which was 1.02 percentage point lower than that in April. According to related statistics, in the second week of May, iron ore shipment from Brazil amounted to 7.12 million mt, up 60.76 percent month on month, while iron ore shipment from Australia amounted to 14.81 million mt, up 25.16 percent month on month. With the increases seen in seaborne iron ore shipments, the supply will be sufficient in Chinese market, which will curb the continuous rising trend of import iron ore prices.
According to the CISA, as of May 31, the composite steel price index (CSPI) was down 3.45 percent year on year to 111.10 points.
In the May 1-20 period this year, the average aggregate daily crude steel output for all steelmakers in China is estimated to amount to 2.84 million mt, down 0.1 percent compared to the average level in the April of the year. Meanwhile, China has consumed more scrap, which will slacken the demand for import iron ore, which will exert a negative impact on import iron ore prices.
The sharp rises in import iron ore prices have shrunk steelmakers’ profitability, for instance, in the January-April period of the year, CISA-member steelmakers have registered a year-on-year rise in sales revenue, while posting a year-on-year decline in their gross profits. Following big declines in their gross profits, steelmakers will likely lower their capacity utilization rate, which will drag down the demand for import iron ore and negatively affect their prices in June, the CISA said.