Iron ore posts big decline after new round of steel productıon cuts

Import iron ore prices in China have moved down sharply on October 28, Thursday, compared to October 27, while also indicating a downtrend on a weekly basis, as Chinese authorities in Tangshan have announced another round of stricter steel production cuts, aiming to improve the air quality.

Iron ore fines with 62 percent Fe content have fallen by $6.2/mt compared to October 27, to $112/mt CFR. This level is also $5.6/mt above that seen a week ago on October 21. Brazilian iron ore with 65 percent Fe has moved down by $10.65/mt over a day to $129.65/mt CFR, down $10.55/mt week on week, SteelOrbis has learned.

On October 28, a deal for 170,000 mt of 61.0 percent PB fines has been done at price of $109.9/mt CFR, for shipment during November 28-December 7. Also 62 percent Fe ore has been traded at $111.8/mt CFR. 170,000 mt of higher grade Brazilian 65 percent Fe fines have been sold at December index +$3/mt.  

Import iron ore prices have fluctuated in the small range over the week, but have fallen sharply today amid the sufficient supply and expected worsening of demand. Production restrictions have been issued in many regions, with increasing blast furnaces being implemented maintenances, weakening the demand for iron ore.

Due to poor air quality in Tangshan, the authorities has implemented new more severe restrictions with sintering and blast furnaces capacities operations at most mills in the area will be reduced by 30-70 percent depending on the mill from the higher utilization rates in the autumn season. More than 20 enterprises will stop operations until further notice.

It is thought that import iron ore prices may edge down in the coming week, though the extent of the decline may be not very big since prices are already low.

Iron ore futures prices at Dalian Commodity Exchange (main contract i2201) have moved down by 2.36 percent today, coming to RMB 683.5/mt ($107/mt) compared to October 27, while rose by RMB 33/mt ($13.4/mt) or 5.07 percent compared to October 21.

As of Thursday, October 28, rebar futures at the Shanghai Futures Exchange are standing at RMB 4,712/mt ($737/mt), decreasing by RMB 264/mt ($41/mt) or 5,3 percent since October 21, while decreasing by 1.28 percent compared to the previous trading day (October 27).

Imported iron ore prices in China (week-on-week basis)

Price includes VAT.  

Nationwide iron ore concentrate prices (66 percent Fe)

Price includes VAT. 

$1 = RMB 6.3957