Seaborne iron ore prices hit a near 6.5-year nadir Thursday, March 19, with the benchmark Platts 62% Fe Iron Ore Index losing $0.75/dmt on the day to be assessed at $55.50/dmt CFR North China.
The last time the 62% Fe IODEX was lower was November 4, 2008, when it was assessed at $55/dmt CFR North China.
The market saw largely unfavorable conditions that prevented any improvement in spot prices, as an earlier anticipated recovery in steel demand with the weather in China warming up did not materialize.
Typically each year, as the wintry conditions ebb away in March, productivity in the downstream industries of construction and infrastructure development, both major consumers of steel material, improves.
The boost in steel demand then leads to greater appetite among Chinese mills for iron ore, a core steelmaking raw material.
However, this year, Chinese steelmakers foresee a possible cut to crude steel output to come, despite the seasonal situation.
Mills are subject to stronger environmental concerns, with a concerted effort by the government to lower emissions, leading to caution about ramping up production levels.
Additionally, some mills, particularly those in the north, have been considering either laying idle or not bringing back online blast furnaces that underwent maintenance work, in a bid to prevent higher output levels and mitigate losses as steel prices failed to recover much ground.
This all greatly reduced spot buying interest for iron ore.
The daily crude steel output of key steel mills from March 1-10 was 1.6815 million mt, down 5.05% from late February, according to data from the China Iron and Steel Association Wednesday.
Additionally, market sources said there was unlikely to be a further plunge in seaborne iron ore prices as spot levels had already reached such lows, but there was little to no confidence about a sustainable rebound anytime soon.
Source: Platts
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