Recent announcements made by a number of Chinese mills about steel production cuts and the weak results of the main consuming sectors in July have led to a decline in iron ore prices today, August 15, following the rebound recorded yesterday. Prices of Australian iron ore fines with 62 percent Fe content have lost $1.75/mt since Wednesday, coming to $88.5-89/mt CFR, while Brazilian 65 percent Fe fines are at $98/mt CFR, $0.5/mt below yesterday’s level.
There were three deals concluded at platforms today, all based on indexes. A cargo of 170,000 mt of fines with 62 percent Fe content was sold at COREX at the September index price plus $1.55/mt. Two other transactions were concluded at GlobalOre: a deal for 80,000 mt of fines from BHP Billiton’s Mining Area C (MAC) in Western Australia was concluded at the September index plus $0.1/mt, while 170,000 mt of low-alumina fines with 62 Fe content changed hands at the October index plus $2.6/mt. Overall demand is still low, most market participants agree.
After steelmakers in Shaanxi, Shanxi, Gansu and Sichuan cut their production earlier this month, six major steelmakers in Shandong Province on August 13 announced their decision to cut production of rebar and wire rod, which are mainly used in the construction industry, by 400,000 mt. Moreover, if the Chinese authorities will not unveil a fresh stimulus package to support local demand, Chinese steelmakers will continue to be cautious in their raw material purchases given their squeezed margins.