During the past week the Chinese iron ore market has followed an overall softening trend. Due to the production cuts and cautious approach adopted by steel producers, significant price declines have been observed in prices of both imported and domestic iron ore. It is thought that the Chinese iron ore market will likely continue its downward trend in the short term.
Product name | Specification | Average price (RMB/mt) | Price ($/mt) | Weekly change (RMB/mt) |
Iron concentrate | damp base (iron content: 66 percent) | 870 | 128 | -100 |
India fine ore | 63.5 percent | 1,210 | 177 | -80 |
In the past week, international freight rates have continued their downward trend. On May 20, the Baltic Dry Index (BDI) closed at 3,803 points, down 111 points compared with last week. On May 20, the average freight charge from Brazil to Beilun port in China was $29.53/mt, down by $3.47/mt week on week. Meanwhile, the average freight rate from Western Australia to Beilun on the same day was $11.63/mt, down by $2.15/mt compared with May 13.
During the week in question, the Chinese iron ore market has followed an overall declining trend. At present, the price of 66 percent damp base iron ore in Tangshan, Hebei Province is at the level of RMB 870/mt ($128/mt, tax excluded), down RMB 100/mt ($15/mt) week on week, while the market prices in the northeastern region stand at RMB 760/mt ($111/mt, damp base/tax excluded), also down RMB 100/mt ($15/mt) week on week. Meanwhile, the prices of 63.5 percent Indian fine ore have declined to $130/mt FOB, while the CFR price (Tianjin Port) is at $156/mt, both down $22/mt week on week. In addition, quotations of 63.5 percent Indian ore are down by RMB 70/mt ($10/mt) week on week to RMB 1,220/mt ($179/mt) at Chinese ports, while the deal price of 62.5 percent Australian PB fines has trended down by RMB 60/mt ($9/mt) week on week to RMB 1,230/mt ($180/mt), with the market price of 65 percent Brazilian fine ore down RMB 80/mt ($12/mt) to RMB 1,280/mt ($188/mt).
Despite all these softening movements, China's iron ore market continues to remain silent as regards transactions. The spot price of imported Indian iron ore has declined to RMB 1,200/mt, down RMB 150/mt compared with the peak price in the previous period. However, due to the sharp declines observed in export quotations of Indian iron ore to China, most traders and mills are pessimistic on the prospects for the market and are not in any rush to purchase spot supplies or imports. Meanwhile, due to the softening trend seen in China's domestic steel market, most mills lack optimism, with some small- and medium-sized mills preparing to or having already started to cut production, which will result in weak demand for iron ore in the near term. It is thought that the overall price of iron ore will continue to trend down in the coming period.