Chinese iron ore market maintains its upward trend

On the back of increasing domestic crude steel production, iron ore prices in China have maintained their upward trend in the past week. Looking at the current situation, as ships have been unable to unload materials at some northern Chinese ports due to severe weather conditions, iron ore inventories at the ports in question have declined rapidly. Meanwhile, given the tight supplies of Australian ore, a great deal of inquiries have been sent to the Indian market, thus significantly driving up export quotations of Indian ore.  

In the past week, the international shipping freight market continued to move up sharply. On November 12, the Baltic Dry Index (BDI) closed at 3,954 points, up 659 points compared with the level on November 5. On November 12, the average freight charge from Brazil to Beilun Port in China was $42.94/mt, up by $7.04/mt week on week. Meanwhile, the average freight rate from Western Australia to Beilun on November 12 was $18.84/mt, a rise of of $4.45/mt week on week.

Iron ore prices in the Chinese market still retained their climbing trend during the past week. At present, the price of 66 percent damp base iron ore in Tangshan, Hebei Province is at the level of RMB 630/mt ($92/mt, tax excluded), while the market prices in the northeastern regions stand at RMB 530/mt ($78/mt, damp base/tax excluded), both up by RMB 10/mt ($1/mt) week on week. Meanwhile, the prices of 63.5 percent Indian fine ore have risen by $4/mt to $82/mt FOB, while the CFR price (Tianjin Port) is up by $5/mt to $102/mt. Additionally, the price quotation of 63.5 percent Indian ore is now at RMB 770/mt ($113/mt) at Chinese ports, up RMB 20/mt ($3/mt) week on week, while the deal price of 62.5 percent Australian PB fines is up by RMB 20/mt ($3/mt) week on week to RMB 760/mt ($111/mt), with the market price of 65 percent Brazilian fine ore standing at RMB 800/mt ($117/mt), up by RMB 20/mt ($3/mt) week on week.

Over the past week, imported ore prices in the Chinese market have been boosted by increased overseas iron ore export quotations, against the background of an unchanged trading volume. Stimulated by the increased steel futures market, steel prices in China have increased considerably in recent days, thus providing a certain degree of support for the domestic iron ore market. Due to the limited supply of Australian ore, most inquiries from China have been focused on Indian ore. Currently, Indian ore is offered at $108/mt for the export market, while actual deal prices of Indian ore in China are in the range of $101-103/mt. Generally speaking, the current prices of iron ore, both domestic and import, are too high for the mills, and so most mills have adopted a wait-and-see stance as regards market trading. In addition, given the severe weather conditions, vessels have been unable to dock at some northern ports. According to reports, vessels at Jingtang port are unlikely to unload within the next ten days, while those at Caofeidian port are unlikely to unload within fifteen days. In this context, spot ore prices at the northern ports are expected to climb up further on the back of the tight availability of spot ore supplies. Overall, due to the increasing domestic steel prices and the insufficient market supply of iron ore, the Chinese iron ore market is likely to maintain its rising movement in the coming period.