With significant increase in arrivals, iron ore inventories at 35 ports continued to accumulate

Milan’s Court of Appeal has reserved its decision on a request by Acciaierie d’Italia and Ilva in Extraordinary Administration to urgently suspend enforcement of an earlier order requiring the shutdown of the hot-end operations at the Taranto steelworks. The underlying court order, confirmed in July, requires hot-end activities to be halted by October 28, but the latest hearing did not produce an immediate ruling on whether implementation of that order will be suspended. The timing is becoming increasingly critical for the plant. According to statements made following the hearing, Acciaierie d’Italia has indicated that September 16 represents the operational point of no return for beginning the shutdown process, as once procedures to switch off the hot-end facilities are initiated, reversing them would become extremely difficult. Lawyers involved in the case said they expect the court to issue its decision before that date. The situation therefore remains a significant supply-risk factor for the Italian steel market, particularly as the Taranto works is a major source of domestic flat-steel feedstock. However, no new court decision has yet ordered, prevented or suspended the shutdown. The key near-term development will be the Court of Appeal’s ruling on the suspension request ahead of the September 16 operational deadline.

Iron ore futures were weaker today. The DCE most-traded I2701 contract settled at 718 yuan/mt, down 1.78% from the previous session. Qingdao port spot prices fell 8-13 yuan/mt on average. Traders were reasonably active and mills bought largely to cover immediate needs. Spot trading was thin.

Prices in the domestic ore market in the Liaodong region showed no significant fluctuations. Trader inquiries were weak, with bids mostly on the low side, but ore processors held back from selling, and most were reluctant to accept prices below their psychological expectations. Both sides traded cautiously and on an as-needed basis, with market shipments mostly consisting of earlier orders. Steel mills were largely operating at a loss, and with a strong focus on cost control, raw material inventories were mostly kept at low levels. There was little room for growth in iron ore demand, which constrained upward movement in ore prices. However, ROM ore supply was insufficient, and beneficiation plants were operating at low utilization rates.