Posted on 19 Jul 2022
Offering prices of domestically produced iron ore concentrates in China's major mining regions generally trended down during the week of July 11-15, according to Mysteel's survey. Market sources said steelmakers' dull demand for ore was still the reason for the ongoing weakness of prices.
As of July 15, the offering price of 66% Fe grade domestic iron ore concentrates in Tangshan, in North China's Hebei, had decreased to Yuan 900/dmt ($133.2/dmt) EXW and including the 13% VAT, down by Yuan 57/dmt on week and hitting a new low since last December 10, Mysteel's survey showed.
Last week, most steelmakers continued to maintain low stocks of iron ore instead of buying more, as their margins when selling finished steel have yet to enjoy any large recovery, Mysteel Global noted.
Also, steel mills' enthusiasm for procuring ore was dampened further by last week's slump in futures prices of major ferrous commodities, according to a Shanghai-based market source. Even if some had immediate need for domestic ore, they opted to submit aggressively low bidding prices, aiming to bolster their margins, she said.
For example, the most-traded iron ore contract on the Dalian Commodity Exchange for September delivery closed the daytime session at Yuan 645/dmt on July 15, tumbling by Yuan 121/dmt from the settlement price on July 8 and making for the lowest since late February.
China's imported iron ore prices moved down accordingly, with Mysteel SEADEX 62% Australian Fines dipping by $17.2/dmt on week to $96.35/dmt CFR Qingdao by July 15 – a new low since November 26.
As for the domestic ore suppliers, under the circumstances some mining companies were forced to concede to the mills' low bid prices, the analyst observed, because they are under great financial pressure and needed to generate cashflow.
Meanwhile, "more mining companies have decided to halt their production and roll out maintenance due to their shrinking margins," she added.
"Although both supply and demand of domestic ore were weak (and show signs of remaining so, this week), steel mills were playing the dominant role in the market," she pointed out, suggesting that there is still room for the prices to drop.
Source:Mysteel Global
