Prices for imported iron ore in China have posted a significant drop today, March 11, reacting to high stocks of the raw material at ports, signaling there is no demand improvement, and some mills have postponed the resumption of work after maintenances. Moreover, the recent announcement by a Chinese minister about the bankruptcy of housing developers has impacted the market mood, as the steel and iron ore demand issues could last longer, even though the construction season is close.
Iron ore with 62 percent Fe content has hit $108.5/mt CFR, losing $7.9/mt or 6.8 percent over the day. A price below $110/mt CFR was last seen in the market in August 2023. Ex-Brazil iron ore with 65 percent Fe content has dropped to $121.25/mt CFR, down $7.2/mt. At Corex, 170,000 mt of Carajas fines with 65 percent Fe has been traded at this level today, for delivery during March 21-30.
“The sentiment in China is still negative mostly due to high inventory pressure and the government allowing the bankruptcy of some housing developers, and so the falling price trend has continued since last week,” a Chinese trader said. The spot iron ore prices have also reacted to the fall in futures. Iron ore at Dalian Commodity Exchange has lost 5.41 percent today, coming to RMB 831/mt.
Since demand for steel in China has failed to improve so far, market sources are worried about future developments since, with the current low margins and stock pressure on mills, a number of mills may choose to keep production at lower levels, reducing demand for iron ore. Also, as reported earlier by SteelOrbis, 12 Chinese provinces and cities at high risk from debts were requested by the central government to slow down or halt construction of infrastructure projects, which will impact demand for steel and raw materials.
“For real estate companies that are seriously insolvent and have lost the ability to operate, those that must go bankrupt should go bankrupt, or be restructured, in accordance with the law and market principles,” Ni Hong, minister of Housing and Urban-Rural Development, said on Saturday. This announcement has significantly impacted the mood in the real estate sector and has led to a steel price decline as a result.
Local rebar and HRC spot prices in China have lost RMB 60/mt ($8.4/mt) today. Export prices for longs and billets have gone down by $5/mt, with the latter hitting $490-500/mt FOB.
$1 = RMB 7.0969
