Iron ore retreats to $115/mt CFR again as demand concerns rise after new announcement

Import iron ore prices in China have indicated declines today, Thursday, May 30, following significant declines in futures prices and in sentiments in general since, even though demand for steel itself has been not as good as expected recently and supply has been increasing, concerns are rising after the government announcement that it will restrict crude steel production in 2024.  

Iron ore fines with 62 percent Fe content have seen a decline of $3/mt on May 30 to $115.25/mt CFR. This level is $5.1/mt below that seen on May 23. Brazilian iron ore with 65 percent Fe has decreased by $1.75/mt on May 30 to $130.9/mt CFR, while down $4.4/mt week on week, SteelOrbis has learned.

39 deals for a total of 763,900 mt of iron ore were done at the Corex platform on May 30. In particular, 170,000 mt of 65 percent Carajas fines were traded at $130.9/mt CFR for shipment during May 25-June 3. Also, 90,000 mt of 60.5 percent Jimblebar blended fines were sold at the July 62 percent index -$8.3/mt, for shipment during June 26-July 5. In addition, 12,026 mt of 63.42 percent fines have changed hands at RMB 865/mt ($121.7/mt), for delivery to a Chinese port.

During the given week, import iron ore prices have decrease amid the sharply increasing iron ore volumes arriving at ports. At the same time, melted iron outputs have declined in the given week, weakening the demand for iron ore. As for the coming week, shipments of iron ore in the global market will increase further, which will exert a negative impact on prices from the supply side. The weather will be hotter and hotter in June, which will negatively affect the steel market and drag down iron ore prices.

Also, the State Council of China has issued a plan for 2024-25, stating that China will strengthen the regulation of steel capacity and production outputs, though no new information has been issued for new capacities, which are prohibited, and only mills achieving environmental performance level A may continue capacity replacements with a gradual increase. However, market sources believe that the government may also call for another year of at least stable crude steel production in 2024. “Unfortunately, the power of such a rise [of steel prices after the announcement about no new capacities and production controls] cannot be sustained and the market fell during the day and came back to its stuck situation,” a trader said.

It is thought that import iron ore prices may fluctuate within a limited range in the coming week, while likely edging down in the longer term.

Iron ore futures prices at Dalian Commodity Exchange have decreased by 2.37 percent today to RMB 865/mt ($121.7/mt) compared to the previous trading day, May 29, while decreasing by RMB 41/mt ($5.8/mt) compared to May 23.

As of May 30, rebar futures at Shanghai Futures Exchange are standing at RMB 3,737/mt ($526/mt), decreasing by RMB 38/mt ($5.3/mt) or 1.0 percent since May 23, while down 0.08 percent compared to the previous trading day, May 29.

Imported iron ore prices in China (week-on-week basis)

Price includes VAT.  

Nationwide iron ore concentrate prices (66 percent Fe)

Price includes VAT. 

$1 = RMB 7.1111