Average import profit for iron ore this period narrowed slightly from -RMB 1.84/mt to -RMB 2.43/mt, mainly on the back of higher freight rates and exchange rate fluctuations.
As of the end of last week, iron ore port inventories posted a modest drawdown, but demand was tending weaker. Total iron ore inventories across China's 35 major ports stood at 143.91 million mt, down 1.70 million mt week-on-week, with overall inventory levels flattening out; average daily port outbound volumes rose 55,000 mt week-on-week to 3.145 million mt. Some domestic mills have scheduled equipment maintenance amid tight coke supply, weakening their appetite for iron ore procurement, and growth in blast furnace hot metal output is expected to slow. In addition, Indonesian steel mills are facing industrial water shortages due to El Niño, while market reports indicate that a Vietnamese mill has banked down a blast furnace following a fire. Taken together, these factors point to softer iron ore demand in the near term. Iron ore prices are therefore likely to come under pressure, with import profits set to stay in modest loss territory.
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