Spot iron ore offers remained volatile as piling iron ore inventories at ports in China and oversupply pressured the raw material, industry sources said.
Iron ore inventories at China's big ports have surged to above 100 million tons, traders said, as Chinese steel mills are running low capacity utilisation while top miners in Australia and Brazil continue ramping up production.
"High port stockpiles have suggested the supply glut remains overwhelming which will keep pressuring prices," analysts said.
"Some investors are going slow on the raw material as they believe low inventories of steel products mean steel demand could pick up, but a cooling economy may fail their expectations," an analyst said.
"The (steel) market supply and demand condition will not improve largely in the first quarter, so steel prices are likely to stay volatile at low levels," the China Iron & Steel Association said in a report.
China has determined to tackle the overcapacity in industrial metals, including steel and cement, this year by making inefficient producers shut down.
The move, aiming to squeeze steel production, is expected to support steel prices but to pressure iron ore prices as well due to lower demand, traders said.
Iron ore for delivery to China's Tianjin Port stood at $41 a ton.
Following are international iron ore prices:
Grade % Fe |
Origin |
Product |
load port |
Destination |
Jan 21, 2016: cfr ($/ton) |
Jan 20, 2016: cfr ($/ton) |
Jan 19, 2016: cfr ($/ton) |
63.5/63 |
India |
Fines |
Vizag |
Qingdao |
41 |
42 |
40 |
62 |
India |
Fines |
FOB Vizag |
|
11 |
12 |
10 |
62 |
Australia |
PB |
Dampier |
Tianjin |
41 |
42 |
40 |
63.5 |
Brazil |
Fines |
Brazil |
China |
43 |
44 |
42 |