CISA: Iron ore prices unlikely to continue their rising trend in July

Wednesday, 10 July 2019 10:04:49 (GMT+3)   |   Shanghai
       

According to a new report issued by the China Iron and Steel Association (CISA), as of June 30 this year imported iron ore inventory at Chinese ports totaled 116 million mt, decreasing by 6.72 percent month on month. Although iron ore inventory continued to decline month on month, the pace of the decreasing trend slowed down. With the increases seen in seaborne iron ore shipments, iron ore inventories at Chinese ports will likely start to increase, which would curb the ongoing rising trend of import iron ore prices.  

According to the CISA, as of June 30 the composite steel price index (CSPI) in China was down 5.48 percent year on year to 109.45 points.

For the June 1-20 period this year, the average aggregate daily crude steel output for all steelmakers in China has been estimated at 2.8515 million mt, down 0.78 percent from the average daily level in May of the current year. Meanwhile, the authorities in Tangshan have required local steelmakers to implement production cuts from June 24 to July 31 this year, which will slacken demand for iron ore and negatively affect iron ore prices.

The sharp rises in import iron ore prices have shrunk steelmakers’ profitability. For instance, in the January-May period this year CISA-member steelmakers registered a year-on-year decline of 18.15 percent in their gross profit. Following such big declines in their gross profits, steelmakers will likely lower their capacity utilization rates, a move which would not provide support for further rises in iron ore prices, the CISA said. It is thought that iron ore prices will likely edge down to a more reasonable level in July, the CISA indicated.

 

 


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