APEC Blue begets more bearish iron ore market in China

2014-11-12

APEC iron ore

During APEC, affected by suspension of construction in building site and production restriction in steel mills in North China, iron ore price hit 5-year low. However, even after the APEC meeting, the iron ore market may still in a very bearish position and it is worried that the oversupply situation in later iron ore market will be more severe. Iron ore price is down 44% year-to-date.

So far, domestic iron ore port inventories have exceeded 100 million tons for nine months. Statistics show that imported iron ore port inventories in China amounted to 107.18 million tons till late October, marking a decline of 3.51 million tons (3.17%) from September and an increase of 26.82milliontons (33.37%) from last year.

In order to ensure the air quality during the APEC meeting, several provinces such as Beijing,Tianjin, Hebei province, Shanxi province, Shandong province and Inner Mongolia etc have implemented production restriction and construction suspension in industrial enterprises,open-pit mines and construction sites. It has shown Chinese government’s determination to control pollution strictly.

With the new capacity gradually reaching design capacity, some international large mines continue to increase iron ore supply, the supply pressure in iron ore market is still quite high. Statistics show that from January to September the output of domestic iron ore has seen an increase of 75.86 million tons (7.2%) from the same period of 2013. China imported iron ore 699 million tons, a rise of 98.84 million tons (16.5%) from 2013. While in the same period, the output of pig-iron only increased by 2.05 million ton (0.4%) from 2013.

Whether or not the iron ore market to show a pick-up after the APEC meeting? According to the latest released China's steel sentiment index (CSSI) from Platts, the iron ore market in China is expected to be rather gloomy. The CSSI value hits the lowest level of 25.61 points, which indicates players in China’s iron ore market predicated a further weak steel demand and a sharp drop of expectation in export orders in China.

Source from : CNSS

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