Following its continuous ascension over three consecutive months, China's domestic iron ore market began to show softness in the past week, with a slight slip observed in prices of both domestic and imported ores. The rapid drop in the domestic finished steel markets has gradually impacted the iron ore market in recent days. If local steel prices continue to go down, China's iron ore market is likely to enter a phase of declining movement.
Product name | Specification | Average price (RMB/mt) | Price ($/mt) | Weekly change (RMB/mt) |
Iron ore concentrate | damp base (iron content: 66 percent) | 670 | 98 | -20 |
India fine ore | 63.5 percent | 850 | 124 | -10 |
The international shipping freight market remained slack during the past week, with a further slump seen in the Baltic Dry Index (BDI) index. On August 13, the BDI closed at 2,612 points, down 439 points compared with the level on August 7. On August 12, the average freight charge from Brazil to Beilun Port in China was $31.15/mt, down by $1.83/mt week on week. Meanwhile, the average freight rate from Western Australia to Beilun on August 12 was $12.14/mt, a decline of $0.12/mt week on week.
Against the background of the decreased prices in the local finished steel markets, in the past week prices of both domestic and imported ores in China's domestic market slid down by a minor margin. At present, the price of 66 percent damp base iron ore in Tangshan, Hebei Province is down by RMB 20/mt ($3/mt) to the level of RMB 670/mt ($98/mt, tax excluded), while the market prices in the northeastern regions stand at RMB 590/mt ($86/mt, damp base/tax excluded), down RMB 40/mt ($6/mt) week on week. Meanwhile, the prices of 63.5 percent Indian fine ore are up by $5/mt to $90/mt FOB, while the CIF price (Tianjin Port) has risen by $3/mt week on week to $108/mt. Additionally, the price quotation of 63.5 percent Indian ore has slipped by RMB 10/mt ($1/mt) week on week and is now at RMB 850/mt ($124/mt) at Chinese ports, while the deal price of 62.5 percent Australian PB fines has remained unchanged at RMB 790/mt ($116/mt), with the market price of 65 percent Brazilian fine ore down by RMB 10/mt ($1/mt) to RMB 860/mt ($126/mt).
Over the past week China's domestic finished steel prices posted a considerable decline, with rebar prices in the Shanghai market down by more than RMB 600/mt. Some market players seem quite pessimistic, while others think that the current downward movement is only a normal market correction following the previous strong increases and that the market will soon halt its downtrend.
Affected by the declining finished steel market, a certain softness has been observed in iron ore prices in recent days, with signs of declining movement seen in the spot ore market. In this context, some traders have lowered their quotations of imported ore slightly so as to stimulate sales. With relatively high iron ore inventories at the various mills, the domestic market is now characterized by sluggish trading activity.
New shipments sent from overseas mines to China are still limited. Apart from shipments of two million mt of spot ore from Brazil in the period from the start of July up to the present, few materials have been sent from Australia. If this situation continues, then most Chinese mills will have to rely on Indian ore for their production, and spot ore prices in China's domestic market will be unlikely to drop down sharply in the near future.