MYSTEEL: China's iron ore prices seen firming in March

During February, iron ore prices were dragged down by growing market pessimism about steel and iron ore demand in the near term, Mysteel Global noted.

Indeed, finished steel consumption nationwide has only recovered at a slow pace after the Chinese New Year holiday, as reported. In parallel, domestic steelmakers have been cautious about ramping up their blast furnace operations after the holiday, with the intensity of the output increase also being below market expectations.

Fundamentally, the sluggish demand for finished steel from end-users has significantly undermined the confidence of steelmakers and caused them to postpone their plans for scaling up production.

Consequently, Mysteel SEADEX 62% Australian Fines slipped to $117.3/dmt CFR Qingdao on February 29, losing a total of $15.5/dmt from the month's high of $132.8/dmt CFR Qingdao recorded on February 1.

So, for the remainder of this month, the bearish sentiment in the market driven by demand concerns will further dent China's prices of imported iron ore, Mysteel's report indicated.

This trend is likely to persist until there is a more significant recovery in steel demand later this month, according to the report, noting that the beginning of finished stocks reduction will mark this turning point.

Generally in China, retail stocks of finished steel steadily build up during the winter lull in demand. By February 29, the stocks of the five major finished steel items held by traders across the 132 cities Mysteel tracks regularly had mounted for 11 straight weeks, rising by another 6.4% on week to 28.7 million tonnes, the latest survey showed.

Written by Lea Li, liye@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com