Posted on 27 Jan 2022
The buying of additional iron ore tonnage by Chinese steelmakers to carry them through the Chinese New Year holiday (over January 31-February 6) when ore trading will be temporarily halted and logistics slow has gradually drawn to a close, according to market sources Wednesday.
Most blast furnace steelmakers continue to produce as usual during the Chinese New Year break - admittedly with reduced staff numbers - and so need to build raw materials inventory beforehand to ensure uninterrupted production, Mysteel Global notes.
"From my observation, many steelmakers in Shandong (East China) have almost completed their pre-holiday replenishment plans for iron ore. In fact, the spot market has already seen less buying from steel mills so far this week," a Shandong-based iron ore trader commented Wednesday. "For the last several days before the holiday, the buying will be more tepid," he expected.
Truck transportation will be temporarily disrupted over January 31-February 2, he also mentioned, which is shorter than the suspension of ore trading and guarantees the steelmakers can meet their continuous need for feeds.
A Zhejiang-based iron ore trader in East China agreed that the buying from steelmakers in the spot market gradually halted from the beginning of this week. "For the time being, it is more about trading between traders, either for taking more tonnage at hand - betting on the firm demand after the long break - or selling at proper prices for healthy margins," he remarked.
An official with a Hebei-based iron ore miner also noted that local steelmakers have prepared enough domestic iron ore for their smooth production during the long holiday. "Our truck deliveries to local steelmakers will stop over January 31-February 6. This is longer than the truck transportation for imported iron ore, but it is Ok for steelmakers," he said.
As of January 20, inventories of imported ore in all forms at the 247 mills Mysteel surveys regularly including ore sitting at steelworks, port stockyards and on the water had grown to 117 million tonnes, up for the sixth week by 2.15 million tonnes to reach a new high since late May 2020, according to Mysteel's data.
Nevertheless, in general, iron ore prices continue to hover at a relatively high level at present, boosted by the bullish sentiment and optimism about a further recovery of iron demand from steelmakers after the holiday, according to a market source
By January 25, Mysteel SEADEX 62% Australian Fines stood at $136.85/dmt CFR Qingdao and above $130/dmt for five straight days.
Source:Mysteel Global
