Today, September 13, iron ore prices have fallen to a new low in the Chinese market at near $120/mt CFR as, though rebar futures and overall demand for finished steel have been good at good levels, the strict crude steel production cuts in China from September has hit demand for iron ore hard.
The price for iron ore with 62 percent Fe content has dropped by $6.6/mt since Friday to $121.7/mt CFR. The last time such a level was seen was in November 2020. Ex-Brazil iron ore with 65 percent Fe has decreased by $4.8/mt today to $144.2/mt CFR.
No deals have been seen at trading platforms today for seaborne material, reflecting the weak demand.
In addition to the provinces of Hebei and Jiangsu, steel production cuts have also started in Guangxi and Yunnan. All mills there are asked to cut crude steel output by at least 30 percent, while in some cases the reduction of operations will be up to 30-40 percent of capacity. The main task of the Chinese government is to curb the energy consumption and for now the producers have targets to meet by early October. But sources believe that the severe production restrictions may be prolonged until December. In such conditions, demand for iron ore has been very weak and seems unlikely to improve much even ahead of the holidays in early October if an easing of these restrictions is not seen.
Sources believe that iron ore prices will fluctuate at $120-130/mt CFR in the next month or two.
Iron ore futures at Dalian Commodity Exchange have dropped by 3.5 percent or RMB 25.5/mt ($4/mt) today to RMB 706/mt ($109.5/mt).
$1 = RMB 6.4497
