Iron Ore Prices to Fluctuate Down in Near Term - CISA

China's imported iron ore prices are likely to fluctuate down in the near term mainly as more supplies will be destined to China with less demand elsewhere in the world because of the COVID-19, according to the China Iron & Steel Association (CISA).
Higher supplies, "together with the gradually stable domestic steel output, will weigh on iron ore prices in the near future," CISA shared in its latest iron ore monthly market analysis released on May 7.

"For now, China's domestic steel demand have gradually recovered and the overall steel production have been stable, while the spread of COVID-19 has yet been under control outside China, and steel production in Europe, the U.S. and Japan, thus, has been affected," CISA elaborated.

More iron ore shipments will be detoured to China from elsewhere, and iron ore prices will not rally, according to CISA.

In the first four months, China's iron ore imports grew by 5.4% on year to 358.4 million tonnes, way higher than the 1.3% year-on-year for the first quarter of 2020, as the import volume for April jumped 11.4% on month or 18.5% on year to about 95.7 million tonnes, as reported.

In contrast, China's imported iron ore prices remained largely stable, with Mysteel's PORTDEX 62% Fe Australian Fines averaging Yuan 660.5/wmt FOT Qingdao and including 13% VAT, down only Yuan 3/wmt on month, while Mysteel's SEADEX 62% Fe Australian Fines averaged $83.8/dmt CFR Qingdao in April, down $4.1/dmt from March, Mysteel Global noted.

In April, daily steel output among CISA's 97 member mills grew 5.5% on month to 1.96 million tonnes/day on average over April 1-20, and the association estimated that daily crude steel production for the whole country averaged 2.6 million t/d over April, or up 2.4% on month.

China's average daily steel output for April, however, was still lower than the volume a year ago that was around 2.8 million t/d, and the country's overall iron ore demand was not exceptionally strong, according to the association, and an iron ore analyst from a Shanghai-based futures company echoed CISA's prediction.

"For the time being, iron ore price may find support from the ramp-up in steel output, but the support will recede for the remaining second quarter when oversupply emerges in the iron ore market with more shipments to China while domestic steel output peaks," he said.

As of May 7, Mysteel's PORTDEX 62% Fe Australian Fines inched up Yuan 5/wmt from April 30 to Yuan 670/wmt FOT Qingdao including the 13% VAT, and the SEADEX 62% Fe Australian Fines also went up $1.65/dmt from April 30 to $83.35/dmt CFR Qingdao.

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