Posted on 02 Feb 2021
Chinese steelmakers’ building up more iron ore stocks for the uninterrupted production during the approaching Chinese New Year (CNY) holiday over February 11-17 has gradually entered the second half, with some mills have procured relatively sufficient ores even for port inventories. And the overall less buying from mills during January 25-29 then further triggered the downturn correction in iron ore prices.
Over the January 25-29 survey period, the trading volume of imported iron ore port inventories among Chinese trading houses averaged 1.14 million tonnes/day, down 16.1% on week.
“Over the past week, the trading for iron ore port inventories settled down slightly compared to the previous week, as steel mills’ buying declined,” a Shanghai-based market watcher commended. “For many steel mills, most additional iron ore stocks for CNY holiday had been prepared and on delivery, so currently the additional buying is more for mills’ daily consumption,” he added.
However, the situation in North China’s Tangshan might be slightly different, as some local steel mills still needed to replenish more iron ore stocks ahead of the holiday, according to a local market source close to mills. “In fact, the truck transportation from and to local ports had been limited over the second half of last week, so many local steel mill’ internal ore stocks had decreased substantially,” he said.
As of January 28, inventories of imported iron ore at the 247 surveyed steelmakers nationwide had grown by 3 million tonnes on week to around 123 million tonnes, sufficient or around 41.2 days of operations at their present daily consumption rate, 1.4 day more than for the prior week, according to Mysteel’s latest data.
Nevertheless, the sentiment among some iron ore traders had softened subtly amid the weakening buying from mills, especially when they observed the intensive maintenance programs by Chinese steelmakers recently, with some actively selling stocks at hand without much consideration on the lower prices,Mysteel Global noted from other market sources.
Thus, the weakening iron ore market fundamentals, together with some other factors such as tightening controls on capital, saw iron ore prices dipped further over the past week.
As of January 29, Mysteel’s SEADEX 62% Fe Australian Fines had dipped for the second week by $11.15/dmt on week to $157.8/dmt CFR Qingdao, and Mysteel’s PORTDEX 62% Fe Australian Fines also dropped for the third week by Yuan 43/wmt ($6.7/wmt) over the period to Yuan 1,112/wmt FOT Qingdao and including the 13% VAT.
Over January 22-28, the blast furnace capacity utilization among China’s 247 steel mills under Mysteel’s surveyhad dipped for the fourth week by another 0.6 percentage point on week to an average of 90.53%, according to Mysteel’s latest data.
Source:Mysteel Global
