Mysteel thinks it will remain flat for August, but around US$180 is still fantastic for FMG, especially with a lower AUD. Underground mines in China still closed. My money is on a gradual rise.Rise in China's iron ore demand in Aug unlikely - Mysteel
Any remarkable growth in Chinese iron ore demand this month is hard to imagine when most steel mills are under pressure to control steel output, according to Mysteel&rsqu...
Any remarkable growth in Chinese iron ore demand this month is hard to imagine when most steel
mills are under pressure to control steel output, according to Mysteel's latest market report released
on August 2.This month, any increment in domestic steel output from newly added steel capacity will also be
rather limited, the report said. Meanwhile, the strong pressure from the central government for steel
output to be curtailed until year's end should see steel mills' production decrease further on month.On the other hand, steel output may still have support from improved steel margins should steel
prices remain high and raw materials prices stay weak, according to the report. As a result, iron ore
demand is seen remaining largely flat from July.Last month, daily molten iron output declined further, according to Mysteel's survey, with the total
volume among the 247 blast furnace steelmakers sampled nationwide averaging 2.33 million
tonnes/day over July 2-29, or down around 40,675 t/d from the average volume over June 4-July 1.The decline was mainly because blast furnace operations among some steel mills in North China
were temporarily suspended around July 1 for celebrations to mark the 100th anniversary of the
founding of the Communist Party of China at that time.Later, in response to Beijing's pledge to lower the national steel output total from the 2020 level,
many provinces started to request local steel mills to trim output during this half year. This saw
many mills review their steel production plans for the coming months, with some even starting
to cut output quickly, given that steel demand in summer is usually poor anyway.The dynamic of lower steel output for the rest of year leading to lower iron ore demand led Chinese
finished steel and iron ore prices to head in different directions last month, the report stated.On the one hand, China's national price of HRB400E 20mm dia rebar under Mysteel's assessment
rallied to Yuan 5,479/tonne ($847.9/t) as of July 30, or up Yuan 540/t on month, while Mysteel
SEADEX 62% Australian Fines index, in contrast, slumped by $36.8/dmt on month to reach
$180.2/dmt CFR Qingdao by July 30, a low since May 26.Regarding ore supplies this month, some increase in iron ore shipments to China from both Australia
and Brazil is foreseen. Domestic iron ore concentrates output may also recover, with the gradual
resumption of mining operations in some mines in Shanxi province in North China, and elsewhere.Most underground iron ore mining operations remained halted in July after an accident in a local
underground iron ore mine on June 10.The report concluded that considering the basic supply and demand fundamentals, it's also hard
to see any substantial climb in iron ore prices this month, though a further large drop in the prices
may also be limited.Written by Victoria Zou, [email protected]
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