NDRC: Beijing to further safeguard iron ore market stability

Beijing will continue to keep a close eye on China's iron ore market and will resolutely curb the unreasonable rise in iron ore prices, Meng Wei, spokeswoman of the National Development and Reform Commission (NDRC) stated at a press conference on April 19.

The NDRC and some related departments will adopt practical measures to secure iron ore supply, adjust demand for the commodity, and strengthen market supervision to ensure the stability of the iron ore market in China, according to Meng.

"This year so far, the NDRC has tightened its supervision on the surging spot and futures prices of iron ore by gathering meetings to warn some market participants and guide them to objectively look upon supply and demand of the market, as well as by cracking down on fabrication and dissemination of price hikes, hoarding, playing up prices and malicious speculation," she said.

In the meantime, China will further increase its self-sufficiency in steelmaking raw materials by reinforcing exploiting domestic iron ore mines, constructing iron ore mining projects and recycling steel scrap, Meng added.

Meng also stated that the country's iron ore prices have already slipped slightly in recent days as relevant measures are gradually paying off.

Earlier this year, China's imported iron ore prices extended the strong uptrend they adopted last November on a positive expectation of steel and iron ore demand recovery, while after mid-March the ore prices experienced fluctuations and eventually went down as March and April - the usual peak season for steel consumption - witnessed tepid demand among end-users, Mysteel Global noted.

For example, Mysteel SEADEX 62% Australian Fines once climbed to a nine-month high of $133.4/dmt CFR Qingdao on March 15 before it dropped to $119.95/dmt CFR Qingdao on April 18, posting an on-month decline of $12.15/dmt.

"Indeed, China's iron ore prices have lost their previous momentum to strengthen in the current quarter, from either market sentiment and fundamentals," commented a Shanghai-based market watcher.

Many market insiders are more believed that the central government will release a plan on capping steel output for 2023, or domestic mills will have to rein in their steel output intensively due to their thinning steel margins and weak steel demand, and both scenarios will weigh on iron ore prices, as Mysteel Global reported.

In fact, the recent weakness in China's iron ore prices has already reflected the worsened market concerns about the possible reduction in steel output in the near term, Mysteel Global noted.

As for market fundamentals, both imported and domestic iron ore supply will recover during the current quarter, while steelmakers' demand for the feed will be constrained more substantially when more mills start conducting maintenance on their blast furnaces due to deepening losses on selling finished steel, the source added, saying that the previous strong support to iron ore prices from the fundamentals have waned after the first quarter.

Written by Lea Li, liye@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com

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