Posted on 09 May 2022
China's iron ore market is likely to see both supply and demand grow this month, though growth in the latter might be limited, according to Mysteel's latest monthly report. Ore prices may fluctuate during the month, it also warned.
During May, Mysteel predicts that imported iron ore supply in the Chinese market will see some increment, as shipments from iron ore producers overseas will gradually increase during the month. Consequently, iron ore arrivals at Chinese ports also expected to increase.
In their latest quarterly reports, major iron ore miners Vale, Rio Tinto and BHP all maintained their annual guidance totals for production and shipments – even though the performance of all three during this year's January-March quarter was lower-than-expected – while Fortescue Metals Group raised its iron ore shipments guidance.
Meanwhile, domestic iron ore production is also forecast to see a further uptick in this month, with the limitations on some miners' operations caused by various pandemic-control measures gradually easing, the report mentioned.
According to Mysteel's survey, domestic iron ore concentrates output in April is thought to have recovered to 23 million tonnes, or up 1.5 million tonnes on month.
On the other hand, iron ore demand from domestic steel producers is expected to firm this month, Mysteel forecasts. However, the increment might be limited because the steelmakers' pig iron output may also be limited.
For the time being, output among the Chinese mills is being influenced by the rather thin margins the makers are winning on their finished steel, together with the pandemic resurgence in some areas and the central government's determination to lower crude steel output this year.
According to Mysteel's data, the daily molten iron output among the 247 Chinese steelmakers surveyed regularly had climbed to an average of 2.34 million tonnes/day over April 22-28, the highest since mid-July 2021. But the volume was still 68,100 tonnes/day lower on year.
In general, Mysteel predicts that the supply-demand gap in iron ore will narrow further this month, with the total inventories at China's ports declining further. However, considering that total port inventories are still at a relatively high level, any support that ore prices might receive from the supply-demand gap would be relatively limited.
Mysteel's latest data showed that the stocks of imported iron ore at China's 45 major ports had dropped to a six-month low of 145.2 million tonnes as of April 28, or down 8.7 million tonnes from the volume as of March 30.
Moreover, Mysteel's report suggests that the iron ore prices might continue to swing in the near future, as the market is rather mixed now.
Throughout April, iron ore prices had experienced a correction, with Mysteel SEADEX 62% Australian dropping to $146.2/dmt CFR Qingdao by April 29 from $157.7/dmt on March 31.
Source:Mysteel Global
