Iron ore slumps by more than $20/mt, at lowest since Nov 2020

Import iron ore prices in China have moved down sharply on today, Thursday, August 19, losing more than $20/mt on the day. The new price level is the lowest since November 25, 2020, reflecting the very bearish mood which is caused by the much lower iron ore consumption expected for the second half of the current year.

Iron ore fines with 62 percent Fe content have plunged by $21.2/mt today compared to August 18, to $128.7/mt CFR. The level is $32.3/mt below that seen a week ago on August 12.

Brazilian iron ore with 65 percent Fe has fallen by $27.3/mt on August 19 compared to August 18, to $153.5/mt CFR, down $39.3/mt week on week, SteelOrbis has learned.

On August 19, the biggest deal was for 65 percent Carajas fines at the October 65 percent index + $3.2/mt. Overall demand has weakened as customers have taken a wait-and-see stance in the falling market.

Such a large drop in iron ore prices this week has been directly connected with poor expectations due to the strict production restrictions on crude steel output. Bearish sentiments prevail among buyers and sellers in the iron ore market. The volume of iron ore arriving in the market has increased, while delivery in the global market has also risen. The Covid-19 pandemic has made some steelmakers increase their stock build-ups, but overall demand has been on the weaker side. The expected continuation of production restrictions will negatively affect the demand for iron ore and market sources believe that prices have not reached the bottom yet.

Today's spot price fall by more than $20/mt was also linked to the sharp drop in futures prices. Iron ore futures prices at Dalian Commodity Exchange (main contract i2201) dropped by 7.18 percent today compared to yesterday, coming to RMB 762.5/mt ($117.6/mt), while they have decreased by RMB 75.5/mt ($11.6/mt) or 9.0 percent compared to August 12.

As of Thursday, August 19, rebar futures at the Shanghai Futures Exchange are standing at RMB 5,017/mt ($773.6/mt), decreasing by RMB 425/mt ($65.5/mt) or 7.8 percent since August 12, while decreasing by 3.87 percent compared to the previous trading day (August 18).

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 6.4853