Posted on 22 Sep 2020
Over the September 14-18 week, Chinese steel mills were cautious about taking too much imported iron ore from ports, according to market sources. Prices of finished steel were causing concern and those of iron ore were fluctuating ahead of the long National Day holiday beginning next week, they explained.
As of September 18, Mysteel’s PORTDEX 62% Fe Australian Fines price had fallen further by Yuan 18/wmt ($2.7/wmt) on week to Yuan 932/wmt FOT Qingdao including 13% VAT, and Mysteel’s SEADEX 62% Fe Australian Fines index had also eased to $124.65/dmt CFR Qingdao, or down $4.35/dmt on week.
By the same day, China’s national average price of HRB400 20mm dia rebar had dipped by another Yuan 29/tonne on week to Yuan 3,795/t including the 13% VAT, according to Mysteel’s assessment.
“Over the past week, steel mills in East China were not so active in procuring iron ore from the portside market, as prices of ore had dropped so rapidly, making it hard for them to avoid risks,” a Shanghai-based market watcher remarked.
A Tangshan-based market insider close to local steelmakers also noted that during the past week, some steel mills there had tended to buy ore frequently but with the purchase volume being smaller each time. The steelmakers were also not so eager to accumulate much additional iron ore stocks, he said.
Mysteel data also showed that over September 14-18, the daily trading volume of imported iron ore port inventories rose by only 1.5% on week to an average of 1.5 million tonnes/day, according to the responses of market participants including traders and steel mills.
“Nevertheless, many steel producers do have plans to rebuild inventories to ensure smooth production during the long holiday over October 1-8, so they may return to the market in the current week,” the Shanghai-based market watcher also added.
Over September 11-17, blast furnace capacity utilization among the 247 steel mills monitored by Mysteel remained largely stable, inching down for the fifth week but by just 0.06 percentage point on week to 94.25%.
For their part, some iron ore traders had showed a relatively bearish stance regarding the domestic steel market near-term when demand had not been as sound as expected. Some who worried that Iron ore prices might fall further had been actively selling stocks at hand over the past week, Mysteel Global noted.
Imported iron ore inventories at China’s 45 major ports remained largely stable at 114.9 million tonnes as of September 17, up marginally by 0.3% on week. But within the total, the tonnage owned by Chinese traders declined further by 1.7% on week to about 54.2 million tonnes as of the same date.
However, among all the iron ore products, the prices of lower-grade iron ore brands remain relatively resilient for the time being as their availability was still limited, especially at ports, other market sources also noted.
The price of Super Special Fines at Caofeidian port in North China’s Hebei province, for example, even inched up by Yuan 3/wmt on week to Yuan 845/wmt FOT including 13% VAT by September 18, according to Mysteel’s assessment.
Under these circumstances, some steel mills have gradually adjusted their blending ratio for lower-grade iron ore products, Mysteel Global also noted.
Written by Victoria Zou, zyongjia@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Kallanish
