SHANGHAI, Dec. 26 (SMM) -- Prices of iron ore concentrate began to fall last week. As of last Friday, prices of iron ore concentrate were down by RMB 15-30/mt. Prices for iron ore concentrate (Fe 65%) fell below RMB 800/mt (wet basis, excluding tax, ex-works) in west Liaoning province, with prices at RMB 780/mt in Beipiao, down RMB 20/mt from a week earlier. Mine operators with high inventory pressure were more willing to move goods than before, but steel mills tried to beat down ex-works prices and only purchased limited amount of iron ore concentrate. Overall transactions were quiet in the market. Linyuan Iron and Steel took the initiative to lower procurement price for iron ore concentrate again. Last Friday, prices for iron ore concentrate (Fe 66%) were RMB 1,060/mt (dry basis, including tax, delivery to factory), down RMB 50/mt from a week earlier. According to some local mine operators, they will ship iron ore concentrate to steel mills in Jiangsu province if local iron ore prices continue to fall. It is reported that prices in Jiangsu will still be RMB 20-30/mt higher than in Chaoyang after deducting RMB 55/mt transportation fee, RMB 38/mt miscellaneous expense, RMB 32/mt sea freight charge and RMB 16-18/mt of water contents.
Some mine operators in Liaoning province were more willing to move goods than before due to tight liquidity and high inventory pressure at the year-end. However, Steelease believes that possibility for prices to fall significantly in west Liaoning province is low, as iron ore production costs in winter will be far higher than average production costs of RMB 600/mt, and the high production costs will support iron ore concentrate prices. If iron ore prices continued to fall further, a large number of mine operators may halt production. In addition, since iron ore prices are higher in South China, mine operators may consider shipping goods to South China.