According to a new report issued by the China Iron and Steel Association (CISA), as of September 30 this year imported iron ore inventory at Chinese ports totaled 120 million mt, decreasing by 0.81 percent month on month. However, with the increases in iron ore shipments and expected higher scrap consumption, oversupply will exist in the iron ore market, which will exert a negative impact on iron ore prices.
According to the CISA, as of September 30, the composite steel price index (CSPI) was down 0.96 percent compared to that recorded at the beginning of the year, while it was down 15.55 percent year on year, to 106.09 points. However, the China Iron Ore Price Index (CIOPI) was up 30.31 percent compared to the beginning of the year, while moving up 22.07 percent year on year. The statistics from the CISA showed the gross profit registered by CISA-member steelmakers was down 28.95 percent year on year in the January-August period of the year, showing a month-on-month decline for the third consecutive month. The high levels of iron ore prices were the main reason to result in declines in steelmakers’ gross profit.
In the September 1-20 period this year, the average aggregate daily crude steel output for CISA-member steelmakers amounted to 2.0884 million mt, down 0.68 percent compared to the average level in the same period of August this year. In the coming period, due to production restriction measures implemented for the autumn-winter heating season, the crude steel output will likely decline further, which will slacken the demand for iron ore.
The current international situation is complicated and grim, and the domestic economy is still under considerable downward pressure, which will negatively affect the steel industry and the demand for iron ore. Accordingly, the CISA forecasts that there is still space for iron ore prices to fall further.