The Chinese market for iron ore has seen weak business activity this week due to holidays in the country: both traders and mills remained passive. At the same time, some steelmakers who urgently needed to restock on iron ore have signed deals with foreign suppliers after reasonable discounts were made. However, that was a rare case.
Although the holiday period officially ends on Saturday (the same day consumers are expected to return to the market), buyers are becoming somewhat more active on Friday already. Earlier this week quotations of Indian Fe 63.5% fines stayed unchanged from late September – at $179/t C&F northern ports of China, but on Friday they have dropped by $2/t to $177/t C&F, reaching their three-month minimum, despite the fact that the material is not booked at all. Besides, most steelmakers expect prices for iron ore to fall further to $173-175/t C&F on Saturday.
Some Indian exporters still try to keep prices steady or at least to slow down their fall, citing limited supply, although they realize that their success will fully depend on the situation in the finished products market. A local trading company offers 70,000 t of Fe 63.5% fines at $180/t C&F late October shipment, but hardly any buyers will accept that level under current conditions.
A trader in Hong Kong has reportedly sold a 70,000-tonne lot of Australian Fe 63% Newman fines at $172/t C&F early October delivery, which corresponds to the lower end of last week’s offer price range. At the same time, quotations of Fe 61.5% Pilbara material have dropped to $167-169/t C&F Qingdao ($1/t down).
Iron ore market conditions will likely continue to deteriorate in China due to the unfavourable situation in the segment for finished products, which is expected to stay bearish. Moreover, local steelmakers may cut capacity utilization rates due to growing stockpiles of unsold finished products, which will surely have a negative impact on iron ore quotations later on.
Noteworthy, in September exports through Port Hedland (the largest Australian port) dropped to 20 mt (1% down from August), however, the volumes shipped to China increased to 15.1 mt (5% up) of the total amount. As previously reported, most of the material shipped through the port is that of BHP Billiton, Fortescue Metals Group being the second largest iron ore exporter.
At the same time, iron ore exports from Brazil have decreased to 30 mt (8% down).
(Source: www.metalexpert-group.com )