China's imported iron ore price to average $115/dmt in CY'23

The Mysteel SEADEX 62% Australian Fines index is expected to average $115/dmt CFR Qingdao during full-year 2023, especially should China's central government decide to break with several years' tradition and forego issuing any directive that crude steel output this year be kept at last year's level, according to Yu Chen, Mysteel's senior analyst.
"For the foreseeable future at least, we may not see China introduce a plan to keep steel output flat on year in 2023," Yu told attendees at the 2023 Steel China Conference in Shanghai late last week.

During the first half of this year, Mysteel SEADEX 62% Australian Fines experienced fluctuations and eventually averaged at $117.8/dmt CFR Qingdao, as reported.

In 2022, China decided to curb steel production mainly to cope with the surplus of finished steel supply at a time when steel demand remained weak, Yu explained. "But so far this year, China's total stocks of finished steel have stayed at a relatively healthy level, thanks to the surge in the country's steel exports," he said.

For example, total stocks of rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate held among traders in the 132 Chinese cities Mysteel monitors reached 17.7 million tonnes by June 29, being 25% lower on year.

On the supply side for iron ore, global iron ore production will see an on-year rise of 44.9 million tonnes in 2023, with output during the current July-December half increasing by 24.5 million tonnes on year, according to Yu. He added that the proportion of iron ore shipped from overseas countries to China in total shipments will rise in H2 due to lower iron ore demand from mills elsewhere in the world.

In the meantime, Chinese blast-furnace steelmakers' hot metal output will be higher on year during the rest of the year, if there's no request from Beijing for administrative steel production curbs, he commented.

In this case, China's overall supply of iron ore will rise by 1% from 2022 to 1.402 billion tonnes this year, while the apparent use of ore will see a larger on-year gain of 2.3% to reach 1.41 billion tonnes. All these together will lead to a gap of 7.8 million tonnes between China's iron ore demand and supply, Yu estimated.

Written by Lea Li, liye@mysteel.com

Edited by Zhenqi Yang, yangzhenqi@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.