Domestic iron ore prices were mixed last week, and may appear stable-to-soft this week

Last week, the iron ore prices added 10-20 yuan/mt in Qian'an and Qianxi county in Hebei province; climbed 10-15 yuan/mt in Chaoyang, Beipiao, and Jianping city in west Liaoning province; and rose 10-20 yuan/mt in East China.

In Tangshan, the environmental protection warning led to shutdown of all beneficiation plants for maintenance in the first half of the week, and operation resumption was reported in the second half of the week. Bolstered by tighter spot supply, ferrous metal futures prices hiked, boosting market sentiment and offers from beneficiation plants. Most traders were in a wait-and-see mood. Steel mills were still in losses, and some of them were under maintenance. Therefore, replenishing iron ore demand slowed down. Overall, in spite of weak supply and demand, iron ore prices may have some room to hike, driven by replenishing demand from key steel mills and rising futures prices.

There was no significant change in iron ore market in western Liaoning. Some sill offered low prices. A rise in iron ore futures and the Platts index boosted beneficiation plants’ sentiment, and they showed strong willingness to increase offers. However, iron ore trading sentiment appeared insipid. Recently, overseas market appeared bullish. However, steel mills who suffered losses still lowered bids for iron ore. It is expected that iron ore market in western Liaoning will largely stabilize in a short term, and there will be some room for iron ore prices to hike in some areas.

In East China, iron ore production was normal, but iron ore concentrate supply remained tight. From a pricing perspective, the average price index of imported ore last week increased. It is expected that there will be some room for iron ore concentrate prices to trend up in East China.

On the whole, a iron ore supply crunch lingered in China, offering some boost to iron ore prices. On the demand side, steel mills who suffered more losses aimed to meet rigid demand. If there is no relevant macro news stimulus in the near future, iron ore prices are expected to be stable-to-weak on the near-term horizon.