SHANGHAI, Apr. 11 (SMM) – Prices for imported iron ore are expected to drop next week, due to sufficient inventories and falling profits, according to Steelease, Shanghai Metals Market's ferrous branch.
Imported ore prices continued to rise this week, hitting $119 (733 yuan) per tonne, up $4 (25 yuan) per tonne from the previous week’s level.
According to a recent Steelease survey, approximately 47% of the surveyed mines would cut back on ore purchases in April since they had purchased large amounts during March. Transaction volumes continued to fall last week, however, to 720,000 tonnes, down by 50,600 tonnes from a week ago.
Besides, as downstream demand continued to recover, rebar prices had recently risen by 145 yuan per tonne, but imported ore prices for Fe 62% increased during the same period by 175 yuan per tonne. The surge in imported ore prices may cut into profit margins at steel mills, which would reduce output and demand for imported ore.
The Steelease survey also found that recent improvements in profit margins at steel mills caused operating rates to grow. Daily crude steel production in China during the second half March increased by 8.8% month-on-month and 10.1% year-on-year, according to Steelease data. The increase in steel output would cause a surplus in supply, causing prices to fall back and demand for new ore to fall as well.