Metal Bulletin reports indicate that the iron ore market is entering a stagnant path. Currently, due to environmental crises such as floods and sandstorms in China, the level of iron ore processing has been reduced to a minimum, and in a way, the production of steel and its supplements is proceeding at a slow pace. In the week ending Friday, July 23, amid downtrends in steelmaking, sponge iron prices and iron ore concentrate in marine trading fell. In the following, we will evaluate this issue. Please be with Artan Press.
*** Indicators provided iron ore quotes from Fast Market
Iron ore concentrate premium reduced by more than 65% iron fine, China cfr $ 60.80 per tonne, $ 1.20 per tonne. It was accompanied by a drop of $ 8.96 per ton. Qingdao cfr 66% iron concentrate also fell $ 242.09 per tonne. This price drop in the current situation practically diverted the path of uninterrupted growth of the international steel market. It seems that this issue can moderate the direction of international steel markets.
*** Key factors in the iron ore market
According to sources, inflammation in the iron ore market has experienced a significant downward trend during the week. Because steel production is expected to decline for the rest of 2021. No more optimistic planning. Power outages and steel production in some parts of China due to environmental problems are the headlines. These expectations have reduced the price of iron ore fines, as well as the price of concentrate. An analyst in Shanghai said iron ore prices were reacting to specific reports of declining steel production in several Chinese provinces, reducing the outlook for long-term demand. He added that the sharp drop in iron ore fines entered the concentrate pricing policy last week and that the iron ore and concentrate markets are likely to collapse.
*** Fast Market looks at the decline in international iron ore prices
Fast Market Index for 65% Purity Iron Ore Including a fine for commitments of Brazilian origin, cfr Qingdao averaged $ 245.20 per ton last week, down from $ 253.70 this week to $ 8.50 per ton. A commercial source in southern China said the stockpile of concentrate was very limited last week. He said no deal had been formalized and that he had only been informed of a few offers to buy concentrate. He added that steel mills in China are showing less interest in high-grade iron ore, and even the premiums for medium-grade fines have fallen sharply in response to the impending decline in steel production.
*** Corona is still involved in the steel market downturn
Despite the normalization of the situation of some countries in terms of controlling coronary heart disease, we are the same production targets because of this issue in the world. Regarding iron ore market transactions, Fasmat Market has stated that the additional handling costs for Indian iron ore pellets due to India’s Covid-19 status have also reduced the interest in purchasing such shipments. A high-freight rate could be another reason for lower demand for Indian iron ore concentrate in the current situation, said a Hong Kong business source. Interestingly, the iron ore market all over the world is suddenly overshadowed. By reducing the premiums of some popular brands of medium-grade fines, those for iron ore concentrate can also be affected. Especially now that demand for the latter is still weak.
*** Interest in quality brands in the iron ore industry
Iron ore concentrate, which is typically sold at a monthly rate of 65%, is likely to have lower premiums or even a discount. An iron ore concentrate market activist said that better quality brands, such as Minas Rio concentrate, could still maintain their premiums and generate interest.
*** Steelmakers’ interest in low-grade iron ore
Steel mills in China use more low-grade iron ore than high-grade products because there is no incentive to use high-grade ore to increase steel production in the current production range. Low-level fines such as Yandi fines and Super Special fines create less conflict for the manufacturer and exporter. Shandong Province in eastern China has issued a warning to the province’s steelmakers. Officials in the province have warned steelmakers to cut production from now until December 31 to meet Beijing’s commitment to keep crude steel production below the 2020 level. These measures taken by the Chinese government can curb some production thirst and rising prices in the international steel market.
*** The entry of the Chinese government into the iron ore market
It should be noted that whenever the Chinese government entered the pricing offer, it was successful and was able to control the global price of steel and the iron ore market. An iron ore official and a Shandong-based steelmaker confirmed that they had received a statement from the local government stressing that they should reduce their crude steel production for the second half of this year. The companies said they had previously reviewed and revised their production plans for the coming months, but after announcing a new order, they also reduced their plans for an iron ore depot.
*** Environmental pressures on China’s iron ore market
Another issue that is gaining ground in the international iron ore market is the subject of environmental challenges and the recent strictures of the Chinese on this issue. The fast market has announced that the premium of carat iron ore is increasing again by 65% compared to the grade of 62%, which is due to the imposition of more environmental restrictions in China on the one hand and the increase in the margins of steelmakers on the other. The premium grade of 65% is at its highest one-year level compared to the average grade. By imposing environmental restrictions and reducing production on the one hand, and power outages and environmental crises, floods around the world can most likely be predicted that international steel prices will be controlled in the medium term.
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