Iron ore up sharply today amid economic support hopes, despite news on steel output cuts

Import iron ore prices in China have indicated a sharply rising trend today, Thursday, August 17, though they were fluctuating in the limited range in the earlier part of the week. The hike seen in futures prices, following the government announcement of more support for the economy and demand in the near future, has resulted in price rises, though real demand is still not so great and the news about steel production cuts at more mills in China may prevent prices from recording further sharp rises.  

Iron ore fines with 62 percent Fe content have increased by $4.8/mt today and are up week on week to $108/mt CFR. Brazilian iron ore with 65 percent Fe has indicated a rise of $4.5/mt on August 17 to $120/mt CFR, while up $4.15/mt week on week, SteelOrbis has learned.  

17 deals for a total of 252,200 mt have been concluded at the Corex platform today, including deals for 100,000 mt of 61.52 percent fines and 90,000 mt of 62.7 percent Newman blended lumps at RMB 780/mt ($108/mt) for delivery to Lianyungang port and at the September 62 percent index + $0.14/mt.  

During the given week, import iron ore prices have indicated a fluctuating trend within a limited range amid the news that major Chinese housing developer Country Garden is facing default risks, negatively affecting confidence in the markets. Steelmakers have been cautious in concluding purchases for iron ore amid slack demand. Crude steel production restrictions at more mills, not only in Hebei, but also in Jiangsu and other provinces, are expected to be implemented in the near future, which may affect the iron ore market. For instance, according to reports, mills in Jiangsu have been ordered to cut utilization rates by 20-30 percent compared to the first half of the current year. Most large mills have already been asked to keep total outputs in 2023 not higher than 2022. This may exert pressure on demand for iron ore up to the end of the year.  

However, the People’s Bank of China (PBOC) announced on August 15 its decision to conduct reverse repo operations in the amount of RMB 204 billion ($28.4 billion) and medium-term lending facility (MLF) operations in the amount of RMB 401 billion ($55.8 billion), which boosted market sentiments. And most analysts expect more supportive measures for the property sector in the coming two weeks.  

On August 17, iron ore futures prices indicated a big rise of 4.34 percent amid the declines in inventory levels of finished steel over the past week. It is thought that import iron ore prices in the Chinese domestic market will likely move sideways or post limited increases in the coming week.   

Iron ore futures prices at Dalian Commodity Exchange have risen by 4.34 percent to RMB 768.5/mt ($99.8/mt) compared to the previous trading day (August 16), while increasing by RMB 54/mt ($7/mt) compared to August 10.   

As of Thursday, August 17, rebar futures at the Shanghai Futures Exchange are standing at RMB 3,726/mt ($517.5/mt), rising by RMB 55/mt ($7.6/mt) or up 1.5 percent since August 10, while increasing by 0.68 percent compared to the previous trading day (August 16).  

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 7.2076