Iron ore prices down sharply amid falling futures and insufficient steel demand in China

Iron ore prices have indicated big declines today, Thursday, September 17, after the sharp drop already seen a day earlier, reflecting the increasingly bearish mood in the market. Futures prices have kept falling, reflecting sentiments. One of the main reasons for lower iron ore prices is insufficient steel demand, which has failed to support prices at a more than six-year high.  

Iron ore fines with 62 percent Fe content have moved down by $2/mt today to $122.3/mt CFR, down by $3.9/mt week on week. Prices for Brazilian iron ore with 65 percent Fe have edged down by $2.2/mt on the same day to $135.3/mt CFR, while falling by $4.2/mt compared to September 10, SteelOrbis has learned.

Today, a deal, respectively for 100,000 mt of 61.5 percent PB fines and 70,000 mt of 62.3 percent PB lump, was concluded at the October index + $2.5/mt and the index without extras for lumps.

Since Monday this year, when prices for iron ore with 62 percent Fe reached a new record high of $130.4/mt CFR, the market has been weakening every day. The capacity utilization rates of Chinese steelmakers’ blast furnaces have continued to edge down, reducing demand for iron ore.

Falling futures prices have exerted pressure on spot iron ore prices. Iron ore futures prices at Dalian Commodity Exchange have edged down by 2.71 percent today, coming to RMB 790/mt ($117/mt), while decreasing by 3.9 percent compared to September 10.

If steel demand in China shows improvement in the second half of the month, it will give good support to iron ore prices, sources have said. But as of today, rebar futures at the Shanghai Futures Exchange are standing at RMB 3,577/mt ($529/mt), decreasing by RMB 63/mt ($9.3/mt) or 1.73 percent since September 10, while decreasing by 0.28 percent compared to the previous trading day.

Chinese steelmakers’ iron ore inventories have not indicated big rises as they have only purchased in line with their needs. As a result, players in the iron ore market think that Chinese steelmakers may build up ore stocks ahead of the long National Day holiday (October 1-8), which will likely provide support to import iron ore prices in late September.

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 6.7675