Imported iron ore sales drop in China

SteelOrbis Shanghai Number of deals for recently arrived iron ore to China has dropped due to the price gap with domestic products, leading to a rise in the inventories at ports. On April 7, the total inventory at twenty-three major ports was up 450,000 metric tons weekly at 39.25 million metric tons, among which 8.7 million metric tons are Indian ore. According to China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters (CCCMC), offers for 63.5 percent Indian fine ore are at $53-54/mt FOB, and $71-72/mt CIF. Analysts point out that the prices of domestic ore are lower than those of imported ore, and the price gap is expanding. At present, the price of domestic 66 percent dry base ore in Tangshan is at RMB 640/mt ($80) including taxes, while the truck loaded price of imported 63.5 percent damp ore is at RMB 625/mt ($77). Taking the freight into account, steelmakers' purchasing cost of imported ore reaches RMB 700/mt ($87), much higher than domestic ore prices. Therefore, steelmakers are not willing to purchase imported ore. The iron ore price negotiation is still the focus point. Relevant person in Baosteel stated that the negotiation has not yet involved the price, instead, both parties are still discussing the supply and demand relationship. Generally speaking, Australian ore miners have mild attitudes, while Brazilian CVRD is more aggressive. The iron ore price negotiation is unlikely to come to an agreement in the short term. The delay is beneficial for Chinese mills.