Though in general demand for iron ore in China in late April has been rather strong amid replenishment activities ahead of the Labor Day holiday (May 1-5), prices for import iron ore have inched down this week. Expectations for steel production cuts in China after the holiday, as well as the rather high supply of the raw material from Australia, have prevented market from rebounding.
On April 30, prices for ex-Australia iron ore fines with 62 percent Fe content have settled at $97.55/mt CFR, down by $1.25/mt from Tuesday and losing $2.9/mt over the past week. Ex-Brazil fines with 65 percent Fe are priced at $109.2/mt CFR, $1.6/mt lower than on April 29, while also $3.3/mt lower week on week.
Today, 13 deals for 499,800 mt of iron ore in total have been signed at the Corex platform, including 170,000 mt of 65 percent Fe Carajas fines transacted at $109.2/mt CFR. In addition, a contract for 170,000 mt of 62 percent Fe PB fines was signed at the June index +$1.15/mt, for May 31-June 9 shipment.
Market sources said that overall demand has been better over the past seven to 10 days as mills have been restocking. Nevertheless, port inventories in China have remained above the 140 million mt mark (with the peak at 150-155 million mt in the past year), signaling that supply is sufficient and prices cannot increase much in a buyer’s market.
“Mills have enjoyed reasonable profits and BF utilization rates are high with spring demand supporting declining [steel] inventories,” a Chinese trader said. Nevertheless, the recent talk about steel production cuts in China this year has intensified and impacted the mood in the iron ore market. Some market sources believe that production reductions will be seen from May, while a larger number of market sources believe they will start later this year, from June-August.