Prices for import iron ore in China have plunged today, Tuesday, March 9, after a sharp fall in futures prices as the local authorities have issued a first-level red emissions alert in Tangshan. Steel prices have followed the downtrend, though at a slower pace.
Iron ore with 62 percent Fe has been at $162.6/mt CFR today, down by $10.5/mt since Monday. Ex-Brazil 65 percent Fe fines have been priced at $188.5/mt CFR, $9.5/mt below yesterday’s level.
Trading activity has been poor on Tuesday as market sources have been watching the market after the plunge price. A deal for 100,000 mt of Yandi fines with 58 percent Fe has been done at the April index + $2.5/mt.
The main push for the spot iron ore price drop has come from the falling futures market. Iron ore futures at the Dalian Commodity Exchange have lost RMB 114/mt ($17.4/mt) or 9.9 percent, closing at RMB 1,031.5/mt ($157.9/mt).
This has followed the news of a first-level red alert in Tangshan issued on Tuesday. On Monday, such production restrictions had already been announced. Production at plants located in the Tangshan area and classified as emissions category D will have to temporarily suspend operations by Friday, mills under the categories B and C will reduce production to 40 percent from full operations. Steel mills under category A will implement restrictions depending on emissions individually. But after the latest news, more production suspensions are awaited this week.
Following the drop in iron ore prices, steel quotations have also posted some weakness. Together with steel production cuts, many re-rolling lines have also stopped operations and most end-users in the longs market have not been active in purchases. The average rebar price in China has lost RMB 23/mt ($3.5/mt), coming to RMB 4,747/mt ($726.5/mt) ex-warehouse.
Mills in Tangshan have lowered billet prices by RMB 70/mt ($10.7/mt) today to RMB 4,350/mt ($666/mt) ex-works, including 13 percent VAT. After this, the sentiment in the import billet market in China has become bearish. Sources said that the level of $620-622/mt CFR reported in the latest deal for ex-ASEAN billet to China last week is not workable any more. “Bids are unlikely to be much above $600/mt CFR,” a trader said.
$1 = RMB 6.5338