China iron ore port inventories fell to 3-year low amid robust demand

SHANGHAI, May 25 (SMM) – Inventories of seaborne iron ore at Chinese ports fell for six consecutive weeks to the lowest in about three years, as demand picked up after the Chinese government eased curbs to stem the spread of the Covid-19 pandemic.

SMM data showed that iron ore stocks across 35 Chinese ports decreased 1.33 million mt in the week ended May 22 to 100.45 million mt, some 17.84 million mt lower than a year ago.

For the same week, daily average deliveries from the 35 ports increased 36,000 mt from the prior week to 2.81 million mt, which is up 76,000 mt or 2.8% from the same period last year.

Data from the China Iron and Steel Association (CISA) published Friday showed that crude steel output across major mills in China hit the second highest on record in the middle of May.

On the supply side, iron ore shipments from Australia continued to trend higher and the proportion of deliveries to China inched up recently. Shipments from Brazil, however, remained subdued, leading to tight availability of Brazilian iron ore at some Chinese ports.

Thinner profits caused by the recent surge in raw material prices, however, are set to cap the buying enthusiasm among steel mills and boost demand for lower-quality and non-mainstream iron ore, slowing the decline in port stocks of mainstream ore.