According to a new report issued by the China Iron and Steel Association (CISA), as of August 31 this year imported iron ore inventory at Chinese ports totaled 121 million mt, increasing by 4.21 percent month on month, rising on month-on-month basis for the second consecutive month. The increases in iron ore shipments, expected lower consumption due to restrictions, and the continuing lack of strength of steel prices may continue to put pressure on iron ore prices this month.
According to the CISA, as of August 31, the composite steel price index (CSPI) was down 2.21 percent compared to that recorded at the beginning of the year, while it was down 14.13 percent year on year, to 104.75 points. However, the China Iron Ore Price Index (CIOPI) was up 21.47 percent compared to the beginning of the year, while moving up 28.02 percent year on year.
In the August 1-20 period this year, the average aggregate daily crude steel output for CISA-member steelmakers amounted to 2.1 million mt, up 2.72 percent compared to the average level in the same period of July this year. Meanwhile, China has consumed more scrap.
The CISA stated that the big rises in iron ore prices have negatively affected steelmakers’ profitability. In the January-July period of the year, CISA-member steelmakers have posted a year-on-year decline of 23.93 percent in their aggregate gross profit.
With the 70th anniversary of the foundation of the People’s Republic of China approaching, production restriction measures have been and will be implemented in China, which will reduce steel output and cause a slackening of demand for iron ore. Accordingly, the CISA forecasts that there is still room for iron ore prices to fall further despite the recent rebound.