As the Chinese New Year (CNY) holiday
approaches its conclusion, indications from market sources point towards an
impending downturn in imported iron ore prices in China this week. The market
sentiment had been notably bullish over the past month, fuelled by expectations
of increased demand for raw materials among Chinese mills leading up to the CNY
the optimism that characterized China's iron ore market has gradually
diminished in recent times, eliciting disappointment from market observers who
noted subdued ore restocking activities among most steel mills. Contrary to
initial projections, domestic steelmakers have largely finalized their
restocking plans for iron ore, indicating a waning interest in large-scale ore
replenishment in the run-up to the holiday.
factors contribute to this notable shift in market dynamics. Firstly, the
relatively elevated prices of imported iron ore cargoes have acted as a
deterrent, dissuading steel mills from undertaking substantial replenishment
efforts. Additionally, the persistently slim profit margins in the steel
selling sector have further discouraged domestic mills from engaging in
extensive restocking activities.
decline in steel mills' demand for iron ore has been particularly pronounced in
the past week, coinciding with the conclusion of most mills' pre-holiday ore
purchases. Chinese major ports underscore this trend, revealing that only 3.3
million tonnes of iron ore cargoes were traded during the period spanning
January 29 to February 2. This marks a significant 29% plunge from the total
volume recorded in the preceding week.
attention to the supply side of the equation, projections indicate that
wharf-side stocks of iron ore may continue to accumulate in the ongoing week.
This expectation stems from the anticipation that the increase in the discharge
volume of ore at ports will be outpaced by the rise in its unloaded volume. As
of February 1, inventories of imported iron ore at China's 45 major ports
registered a seventh consecutive weekly increase, climbing by an additional
1.4% compared to the previous week. The total inventory reached 129.5 million
tonnes – the highest level recorded since April 2023.
amalgamation of factors, including decreased ore restocking, dwindling demand
from steel mills, and the sustained build-up of iron ore inventories at major
ports, collectively contributes to the foreseen downturn in imported iron ore
prices in China. In response to the evolving market dynamics, stakeholders will
closely monitor these trends to make well-informed decisions within a landscape
characterized by shifting demand patterns and economic conditions.