Iron ore prices down as supply worries ease, demand hopes support sentiment

Today, June 18, iron ore prices have edged down compared to yesterday after the announcement of Brazilian iron ore producer Vale regarding official approval to reopen its Conceiçao, Caue and Periquito mines at its 36 million mt per year Itabira complex. Nevertheless, sentiments have not become bearish so far even despite steel demand weakening due to the rainy season in China.

Iron ore fines with 62 percent Fe content have moved down by $1/mt today to $102.6/mt CFR, while Brazilian iron ore with 65 percent Fe has also moved down by $1.5/mt to $115.5/mt CFR, SteelOrbis has learned.

A deal for 90,000 mt of 62.3 percent Newman fines has been concluded at $103.1/mt CFR for shipment during July 3-12, while another deal for 5,000 mt of 60.72 percent Jimblebar fines has been concluded at RMB 726/mt ($102.4/mt) CFR Jingtang port.  

During the given week, most Chinese steelmakers decided to consume their inventories of import iron ore first, faced with relatively iron ore price levels. Meanwhile, there has been no big room for blast furnaces’ capacity utilization rates to increase and so steelmakers are unlikely to build up stocks. Moreover, rainy weather in eastern and southern China has negatively affected demand for steel and will also exert a negative impact on iron ore.

Nevertheless, it is thought that import iron ore prices will continue to fluctuate within a limited range in the coming week as hopes for stable demand from China have supported sentiments in the market. China will maintain ample financial liquidity in the second half of the year, according to People's Bank of China governor Yi Gang. New loans are expected to reach RMB 20 trillion ($2.8 trillion) in 2020, nearly 19 percent above 2019. Total social financing could increase by more than RMB 30 trillion. Also, the China's government has continued to cut the reserve requirement ratio (RRR) to support small and medium-sized enterprises.

Iron ore futures prices at Dalian Commodity Exchange have edged down by 1.03 percent today, coming to RMB 765/mt ($108/mt) compared to June 17, while increasing by 0.8 percent compared to June 11.

Also today, rebar futures at Shanghai Future Exchange have decreased by RMB 19/mt ($2.7/mt) or 0.53 percent to RMB 3,615/mt ($508/mt) since June 11, while increasing by 0.58 percent compared to the previous trading day.  

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 7.0903