SHANGHAI, Apr 25 (SMM) - Last week, the National Development and Reform Commission said that the crude steel output reduction policy will continue to be implemented in 2022, triggering market concerns about a reduction in iron ore demand and causing iron ore futures prices to plunge. However, iron ore futures prices rebounded after the quarterly reports of major mining firms showed that the supply contracted significantly. Iron ore demand showed no significant growth under the impact of the pandemic. The spot prices of PB fines at ports in Shandong fell by 10 yuan/mt on a weekly basis, while prices of low-grade ore gained 10-20 yuan/mt as steel mills favoured the latter amid thin profits.
Steel mills will continue to suffer from shortages of raw materials and backlog of finished products due to slow transportation caused by the pandemic. However, stockpiling ahead of the Labour Day holiday may underpin imported iron ore prices.
The iron ore inventories across 35 Chinese ports declined at a slower pace due to concentrated arrivals and inhibited demand in Tangshan where the pandemic remained severe. Considering the increase in shipments from Australia and Brazil, port arrivals will continue to increase in the future.
Tangshan has lifted COVID-19 lockdowns, except for Qian'an and Luanchuan. However, the local transportation has not fully recovered. The current inventory of steel mills, albeit at a low level, can sustain short-term production.