Prices for imported iron ore in China have posted a significant drop of over $5/mt or five percent on June 11, the first day after the Dragon Boat Festival, reflecting the worsening of market conditions. Even though demand has improved after a pause, in general the demand-supply imbalance has been clear and concerns for demand in the near future have increased.
Iron ore fines with 62 percent Fe content have settled at $103.35/mt CFR, down by $5.4/mt since late last week. Ex-Brazil iron ore with 65 percent Fe has been priced at $118.65/mt CFR, losing $5.45/mt compared to the previous working day.
14 deals for a total of 303,200 mt of iron ore have been concluded at the Corex platform on June 11, including 90,000 mt of 60.5 percent Fe Jimblebar blended fines sold at the July 62 percent index -$7.3/mt, for shipment during July 1-10. Also, 90,000 mt of 60.6 percent Fe Mac fines were traded at $97.9/mt CFR for July 6-15 shipment. Though overall trading has improved after the holiday on Monday, there is still significantly lower demand than usual. In particular, last Thursday overall trade volumes at Corex amounted to 857,000 mt.
The iron ore inventories in 10 major ports increased by 1.5 percent week on week to 114.9 million mt on June 7.
The current weak demand has been not the only reason for the declines, as the outlook has been gloomy too. Late last week, the National Development and Reform Commission and five other government departments jointly issued a special action plan for energy conservation and carbon reduction in the steel industry by 2025 and by 2030. According to the plan, by the end of 2025 the energy consumption per unit product of blast furnace and converter processes in the steel industry will be reduced by more than one percent compared to 2023, while energy consumption per unit product of electric arc furnace smelting will be reduced by more than two percent compared with 2023.
News of a planned crude steel production reduction of up to 20 million mt announced in China last week has already impacted sentiments and dragged down prices of iron ore. Even though no fresh announcements have been made this week, the raw material has continued to lose ground, based on high supply and weak demand, impacting the market more than expected.
“Affected by sluggish [steel] demand from January to April 2024, it is estimated that the domestic demand for crude steel will decrease compared to 2023 and that the crude steel output will also decrease year on year due to demand, while administrative restrictions on production will have a limited impact,” according to the action plan document.