WEEKLY: Weak steel demand seen denting China iron ore prices
Although construction labourers will gradually return to building sites this week after spending February 24 in their hometown for the Chinese Lantern Festival, any major revival in domestic steel consumption in the short term is still hard to envisage, according to a Shanghai-based market watcher.
In fact, the feeble growth in steel demand last week after the Chinese New Year holiday ended on February 18 significantly impacted the prices of imported iron ore, as reported.
For example, by February 23 the Mysteel PORTDEX index for 62% Australian Fines in Qingdao had lost Yuan 79/wmt ($10.9/wmt) from February 18 to reach Yuan 947/wmt FOT and including the 13% VAT.
Meanwhile, iron ore demand among most steelmakers after the long holiday was sluggish because the steady declines in imported iron ore prices made mills opt to monitor the price trend first, rather than restock the raw material immediately, Mysteel Global noted.
Also, facing great pressure from poor steel margins or even losses, many makers postponed plans to resume production and others started idling their blast furnaces to conduct maintenance, as reported.
As a result, hot metal production among the 247 Chinese steelmakers Mysteel regular checks ended six successive weeks of gains over February 16-22, easing by 0.5% on week to an average of 2.24 million tonnes/day. The dip in output will continue this week, industry sources also predict.
On the other hand, iron ore port stocks have continued to accumulate lately, given the increase in arrivals of ore carriers at ports when ore demand among mills is weak.
The stocks of imported iron ore at China's 45 major ports under Mysteel's survey hit an 11-month high of 136 million tonnes on February 22, up by 4.6 million tonnes or 3.5% from February 7 and making for the ninth straight survey-period rise.
Written by Lea Li, liye@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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