China’s iron ore market becomes stable

Following weeks of climbing movement, the Chinese iron ore market has become gradually stable over the past week with little rising momentum left. Looking at the current situation, the domestic prices of both finished steel and iron ore have reached at relatively high levels and are expected to remain stable at the current levels in the near future.

In the past week, the international shipping freight market registered a minor slip. On November 25, the Baltic Dry Index (BDI) closed at 4,234 points, down 427 points compared with the level on November 19. On November 25, the average freight charge from Brazil to Beilun Port in China was $42.93/mt, down by $3.62/mt week on week. Meanwhile, the average freight rate from Western Australia to Beilun on November 25 was $18.81/mt, a slide of of $4.45/mt week on week.

Iron ore prices in the Chinese market have maintained a general stability during the past week. The price of 66 percent damp base iron ore in Tangshan, Hebei Province is at the level of RMB 640/mt ($94/mt, tax excluded), while the market prices in the northeastern regions stand at RMB 530/mt ($78/mt, damp base/tax excluded). Meanwhile, the prices of 63.5 percent Indian fine ore have remained at $85/mt FOB, while the CFR price (Tianjin Port) is $105/mt. Additionally, the price quotation of 63.5 percent Indian ore is now at RMB 800/mt ($117/mt) at Chinese ports, while the deal price of 62.5 percent Australian PB fines is up by RMB 20/mt ($3/mt) week on week to RMB 820/mt ($120/mt), with the market price of 65 percent Brazilian fine ore standing at RMB 870/mt ($127/mt), up by RMB 20/mt ($3/mt) week on week.

In a context of the weakening commercial activities, the iron ore market in China indicated little momentum for further ascension and moved on a generally stable trend over the past week. Since the domestic ore prices are lower than the imported ore levels, some northern-based mills have started to make purchases of domestic ore in recent days. Meanwhile, import quotations in the overseas markets have seen a certain decline. Although the market quotations of 63.5 percent / 63 percent fine ore have remained in the range of $106-109/mt CFR, most deals are concluded around the level $105/mt CFR. According to the current situation, it will be difficult for the market to see any further climb as the domestic prices of both finished steel and iron ore have already stayed at relatively high levels. Therefore, the Chinese iron ore market is likely to post certain fluctuations at the current level in the short term.