China Iron and Steel Association expected iron ore prices would keep going down this month in the near term, mainly as the current oversupply situation is likely to be more prominent.
Iron ore supply further increased in October. At the end of October, iron ore stocks at major ports across the country rose 6.67% from a month earlier to 128 million tonnes, CISA said.
According to currently available data, China imported 99.36 million tonnes of iron ore in September, about 4.51 million tonnes higher than a month ago. The increase has been held for three consecutive months, making the September figure close to the historical high.
The supply surplus also came with falling demand. By end-October, CISA-monitored China Steel Price Index declined 1.65% month on month to 104.34 points at the end of October, which was 14.28% lower than the same period last year.
"Steel prices will likely hover around at a low level in the near term, which means it will continue to limit steel production and thus iron ore demand," one source with CISA said.
At the end of October, CISA monitored the price of Chinese domestic iron ore concentrates at 727.01 yuan/t, down 7.25 yuan/t from a month ago; import iron fine was $84.04/t, down $7.36/t.
However, some insiders were optimistic about the neat-term market. One insider said the inventory has been running low at many steel mills and there would be some large restocking activities.
Since the government announced flexible anti-smog measures on the steel industry, most thought environmental inspections wouldn't exert a significant impact on steel production this winter.
The latest CISA data showed steel production is still on the rise. Daily crude steel output at CISA key mills averaged 1.95 million tonnes during October 11-20, up 64,800 tonnes, or 3.43% from October 1-10.
(Writing by Alex Guo Editing by Tammy Yang)
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