WEEKLY: China's iron ore port stocks to mount further

Last week, the volume of iron ore stocked at the 45 major ports covered in Mysteel's weekly survey had swollen to about 115 million tonnes as of November 30, rising for a second week by another 1.7% on week, the latest survey results showed.

For this week, domestic steel mills may reduce the volume they haul from ports to their plants, a Shanghai-based market watcher suggested.

The high prices of imported iron ore recently have significantly diminished the steel mills' interest in buying the feed, their steel margins having already come under pressure from having to pay more money to procure metallurgical coke, he explained.

China's imported iron ore prices have hovered at particularly high levels since mid-November despite the frequent warnings of the country's state planners about tightening market supervision and regulation, Mysteel Global noted. For example, Mysteel SEADEX 62% Australian Fines still sat high at $133.35/dmt CFR Qingdao last Friday, though this was lower by $1.5/dmt on week.

On the other hand, "with more steel mills cutting their production of hot metal to conduct annual maintenance on their blast furnaces (BFs), their actual demand for imported iron ore will fall in the near term," the source said.

The BF capacity utilization rate among the 247 Chinese steelmakers Mysteel regularly checks slid for the fifth straight week by another 0.33 percentage point on week to reach 87.63% over November 24-30.

Also, the enthusiasm of steelmakers to produce will be dampened by a seasonal fall in finished steel consumption in the country, he added.

China's apparent consumption of rebar has steadily declined since November, with the volume falling by another 5.5% on week to reach a low level of 2.52 million tonnes/week over November 27-December 1, Mysteel's tracking showed.

Written by Lea Li, liye@mysteel.com

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