Stable trend for Chinese iron ore prices

SteelOrbis Shanghai The minor decline in finished steel and semi finished steel prices directed many steelmakers to reduce their iron ore purchasing prices in order to lower their cost and to create a milieu for international iron ore price negotiations. On the other hand, the expectations that iron ore prices would definitely increase in international market caused Chinese mills to expand iron ore imports, which led to a sharp increase in iron ore inventory at Chinese ports at pushed up the ocean freight. Nevertheless, prices are expected to keep stable next week. By the end of trading on Thursday, February 23, the price of 66 percent damp base iron ore in Tangshan fell RMB 5/mt ($1) to RMB 495/mt ($61), excluding taxes due to the decrease in steel mills' purchasing prices. Nevertheless, concentrating mills and miners insisted on the previous price level. Only some of them, who are not optimistic about the future of the market or have tight capital, slightly cut their prices. The overall transaction condition was not good. The price in Beipiao, Liaoning Province remained unchanged at RMB 410/mt ($51) excluding taxes because there are more miners in this province. The price quotation of 63.5 percent Indian fine ore was RMB 630/mt ($78) at Tianjin Port, and the price at Qingdao Port was RMB 615/mt ($76). The price of Australian Hamersley 63 and 64 percent fine ore at Beilun Port was RMB 610/mt ($77). These prices retained their previous levels. On February 10, the inventory at China's major ports was 36.93 million metric tons, up 2.47 million metric tons from a week ago. The growth rate is five times higher than the average increase in 2005. The freight for dry bulk cargoes at Baltic Sea hit the highest level with 11.65 percent increase in a week. On February 15, the daily rent for Cape went up by $6,000 or 34.5 percent, which was hardly ever seen in 2005. In addition, the iron ore freight from West Australia to Beilun has now reached $10.6/mt. Though the price is lower than the average price in 2005, it saw the highest increase rate in a day since 2000 with $0.84/mt overnight increase. Chinese steelmakers suffered great losses again due to their hurry to buy low priced iron ore.