Domestic Iron Ore Prices Are Likely to Trend Lower amid Weak Demand

SHANGHAI, Oct 18 (SMM) - The concentrate price index of domestic iron ore stood at 994.8 yuan/mt last week, up 7.4% from a week earlier. Domestic iron ore prices in the main regions rose 20-130 yuan/mt, mainly due to the following reasons. First, the steel mills have higher demand for iron ore after the National Day holiday. And the domestic ore output in some regions trended lower amid power rationing, torrential rain, transportation restrictions, but recovered slowly from the second half of last week. Meanwhile, the price increases of imported iron ore early last week boosted the domestic ore prices.

The prices of domestic ore in Shanxi also increased, and the output has further declined since October. Some mines in south Shanxi have to suspend production and let the water drain away. In north Shanxi, some underground mines had obtained the approval of resumption of production, but the use of explosives was not approved, and they failed to resume the production. What’s more, the ROM cannot arrive at the beneficiation plants due to the transportation restrictions starting from October 1. Therefore, some small-sized beneficiation plants cut output or suspended production.

The domestic ore prices are expected to weaken as the news about intensifying power rationing in Jiangsu and Henan has been confirmed. The production restrictions plan for the heating season in  “2+26 cities” has been rolled out. The relevant steel mills in Shanxi have reported their respective production capacity and production status. The specific restrictions plan will be issued by the end of October.

China Iron Ore Price Index