Posted on 19 Aug 2021
Iron ore stocks belonging to traders at 45 Chinese ports under Mysteel’s weekly survey climbed for the second week by 383,000 tonnes on week to reach 70.4 million tonnes as of August 12, only slightly less than the 70.7 million tonnes record reached on July 22, the highest since Mysteel began conducting this survey in December 2015.
Moreover, the stocks held by traders accounted for 55.8% of the total ore stocks at these ports, with the proportion also being the highest since December 2015, the data showed.
In contrast, as of August 12, the total of imported iron ore inventories at the 45 ports remained largely stable at 126.3 million tonnes, dipping for the third week though only by 110,000 tonnes or 0.1% on week.
“Several factors seem to be behind the traders’ keenness for accumulated ore stocks,” a Shanghai-based iron ore analyst commented. “For example, since mid-July many domestic steelmakers have reduced their iron ore procurement to comply with their lower steel production demands. Consequently, the traders have found it difficult to offload their stocks at hand, given the reduced demand from mills – especially when pessimism prevails in the market and ore prices are steadily falling,” he noted.
Steelmakers have begun curbing production in response to Beijing’s target to lower this year’s steel output from 2020, as reported. In response, many mills have begun to seriously control their iron ore stocks after their production plans were revised.
A Shandong-based iron ore trader also mentioned that recently, ore trading in the spot market has been persistently lukewarm, especially for port inventories.
“Moreover, it has been a while since some steel mills started to re-sell the surplus ore from their long-term deal supplies, and it’s these ore cargoes that ore traders have largely taken over finally,” he added.
Meanwhile, for some large-scale iron ore traders – many actively trading in both the spot and futures markets – taking some quantities in the spot market is also necessary for them when they hold short positions in the futures market, the analyst also added.
As of August 17, Mysteel’s PORTDEX 62% Australian Fines in Qingdao stood at Yuan 1,133/wmt ($174.7/wmt) FOT and including 13% VAT. On the same day, the most-traded January 2022 iron ore contract on the Dalian Commodity Exchange (DCE) closed the daytime trading session at Yuan 834/dmt.
Source:Mysteel Global
