China's iron ore prices seen hovering high in Jan'24

Healthy market fundamentals will keep the prices of imported iron ore in China hovering at high levels in January, Mysteel predicts in its latest monthly report. Despite the overall uptrend, prices are at risk of fluctuating, the report warns.

Since late last month, the positive market outlook for improving iron ore demand in the near term pushed China's imported iron ore prices higher, Mysteel Global observed, as steelmakers are seen re-stocking ore before the eight-day Chinese New Year holiday starting 10 February.

Mysteel SEADEX 62% Australian Fines settled at $140.55/dmt CFR Qingdao on 29 December, for example, rising by another $8.9/dmt on month from the high levels in November.

Market expectations regarding ore demand will grow stronger this month as the long holidays draw near, exerting more upward momentum on iron ore prices, Mysteel's report suggests.

So far, most steel mills are yet to show much enthusiasm for building up their internal stocks of feeds, though they will still have to buy certain quantities soon because the stocks of ore they hold currently are low, the report added.

Inventories of imported iron ore sintering fines nursed by the 114 Chinese steelmakers under Mysteel's weekly survey reached 25.4 million tonnes on 3 January, being 14% below the volume the makers were holding a year ago on 6 January, 2023.

Also, the steelmakers' actual consumption of iron ore may increase this month because some mills will resume blast furnace operations after completing annual maintenance.

Meanwhile, for now, proof of the healthy fundamentals of China's imported iron ore market is evident in the low stocks of iron ore at the country's ports. Port stocks started increasing in late October and by 28 December, the volume piled at the 45 major ports included in Mysteel's regular survey had grown by 5% on month to 119.9 million tonnes, though this was still 9% lower on year.

However, Mysteel's tracking shows that more ore carriers will arrive at China's ports this month so port stocks could accumulate moderately, Mysteel Global notes.

On the other hand, the current prices of iron ore in both spot and futures markets are already at particularly high levels, and any persistent or large increases in prices this month may trigger intensified supervision of iron ore market activity by central government regulators, the report adds.

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