Iron ore prices expected to rise in China

SteelOrbis Shanghai Chinese iron ore prices moved stable through last week, with continuous growth in trading volume, especially for the imported ore at port. Chinese steel mills increased iron ore purchases recently. In particular, due to the rainy weather in Hebei area, iron ore production decreased and led to tight iron ore supply in northern regions. Some medium and small sized steel mills had to hike their purchase prices in order to ensure the supply; however, mines and traders are not active in selling. Therefore, iron ore prices moved steady. In eastern China, steel mills increased their purchase quantity, but mines and traders are unwilling to sell too much at the current price levels. Due to the rise in domestic ore prices in week 32, imported ore at the ports became more competitive. Therefore they have been sold more. Meanwhile, the ascending freight caused some steel mills and traders to postpone their iron ore import shipments. Therefore, Brazilian, and Australian ore inventory at ports decreased slightly. At present, the total inventory of iron ore in China's twenty-three major ports is at 41.59 million metric tons, down 110,000 metric tons compared week on week. According to China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters (CCCMC), the lowest FOB price of 63.5 percent Indian fine ore was $52-53/mt, and the CIF price was at $68-70/mt in week 34. Based on the current steel market situation, China's iron ore market is also likely to move steadily up. However, if crude steel production grows too fast in the short term, then the steel prices would go down, and curb the demand for iron ore.