Iron ore prices fall further amid poor supply-demand fundamentals

Import iron ore prices in China have resumed their decreases today, Thursday, May 4, following an iron ore futures price loss of 2.27 percent on the same day. Weak demand due to reduced steel production and still ample iron ore supplies have been behind the further declines.    

Iron ore fines with 62 percent Fe content have edged down by $3.35/mt today to $103.2/mt CFR. This level is $2.95/mt below that seen a week ago. Brazilian iron ore with 65 percent Fe content has indicated a decline of $3.4/mt on May 4 to $118.6/mt CFR, while down $2.9/mt week on week, SteelOrbis has learned.  

On May 4, three deals for 114,000 mt of iron ore have been concluded at the Corex platform. In particular, 90,000 mt of 60.8 percent Fe content Mac fines have been transacted at $98.3/mt CFR, with laycan during June 1-10.   

Import iron ore prices have edged down further amid steelmakers’ production reductions and the prevailing bearish sentiments among market players. Meanwhile, steelmakers’ profitability has shrunk, exerting a negative impact on iron ore prices. Shipments of iron ore from Australia are expected to increase further amid good weather conditions. Ex-Australia iron ore fines exports to China rose by 17.7 percent in March from February, according to the Australian Bureau of Statistics.  

At the same time, the cuts in steel production outputs will continue in China, which will negatively affect the demand for iron ore. The mood has also been impacted by the lower-than-expected Steel PMI index for April which stood at 49.2 percent, down from 51.9 percent in March. When the index is below the 50 percent mark, it means that the market fundamentals are entering the negative zone. It is thought that import iron ore prices may move on a downtrend in the coming week.   

Iron ore futures prices at Dalian Commodity Exchange have moved down by 3.43 percent to RMB 689/mt ($99.8/mt) compared to April 27, while decreasing by 2.27 percent compared to the previous trading day.   

As of Thursday, May 4, rebar futures at the Shanghai Futures Exchange are standing at RMB 3,615/mt ($523.5/mt), decreasing by RMB 76/mt ($11/mt) or down 2.1 percent since April 27, while declining by 1.85 percent compared to the previous trading day (April 28).  

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 6.9054