WEEKLY: China’s iron ore price firm on supply fears
Source: Mysteel
Nov 12, 2018 15:40
“BHP’s train derailment incident on November 5 might delay (the miner’s) spot iron ore shipments in the short-term, which is likely to squeeze supplies of Australian iron ore for a while,” a Shanghai-based market watcher said. “At the same time, inventories of medium- to high-grade iron ore at ports – especially in North and East China – are still relatively tight. All these factors are encouraging most iron ore sellers to lift their offering prices for both seaborne cargoes and port inventories as much as possible – while the steel mills for now still have appetite to digest some ore quantity.”
Mysteel’s daily survey of imported iron ore trading at major Chinese ports posted an increase of 136,200 tonnes/day on week over November 5-9 to 1.04 million t/d on average, with most deals’ buyers being steel mills.
The trading volume of iron ore seaborne cargoes continued to dwindle on week last week, falling by 108,000 t/d to 136,000 t/d on average over the same period. That said, after BHP’s incident the bids outnumbered those of concluded deals.
Regarding port inventories, as of November 8, stocks of Australia-origin iron ore had shrunk for a second straight week, declining by 681,000 tonnes or 0.8% on week to 80.46 million tonnes over November 2-8, according to Mysteel’s latest report.
Over the past week, the trade for PB lumps was still active in North China, with the participants involved being traders rather than mills. The dealers are eyeing a possible increase in demand for lump when the winter production curbs on sintering operations in most local cities come into force this month.
As a result, as of last Friday the FOT price of 62.5% PB lumps at Caofeidian port had risen by Yuan 7/wmt on week to Yuan 792/wmt, with the price spread continuing to increase between there and Qingdao port.
For this week, a Shanghai-based iron ore analyst warned that market participants will be watching closely to see whether iron ore demand among Chinese steel mills is nearing a crucial turning point and could be set for a sharp decline. They’ll also be trying to gauge the final impact of BHP’s incident on short-term iron ore shipments.
Written by Victoria Zou, zyongjia@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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