BEIJING, Feb. 25 (Xinhua) -- Iron ore prices in China have recently gained momentum and outperformed, despite the slow demand and high steel inventories.
On the futures market, the most active iron ore contract for May 2020 delivery has showed an uptrend since February 3 and seen an increase of about 16 percent up to now.
Similarly, the iron ore prices on the domestic spot market also went up rapidly. The reference price of iron ore (produced in Australia) on February 24 was 677.67 yuan/metric ton (tonne), up five percent from the previous week, according to data of the 100ppi.com, a commodity information provider.
The imported iron ore price index in China (Shanghai) Pilot Free Trade Zone was 644 points on February 24, a daily increase of 0.78 percent, representing an increase of four percent from the previous week, according to Xiben New Line Stock, an information provider.
In sharp contrast to the iron ore market, the domestic steel market has faced the sluggish transactions and rising inventories due to the delayed infrastructure construction.
According to Mysteel statistics, as of February 20, the social inventories of the five major steel products were about 21.45 million tonnes, hitting a record high since March 2013.
As of February 20, the total social stocks of construction steels in 40 cities amounted to 16.382 million tonnes, a new high since 2009, according to SCI99.com, a commodity information provider.
Industry insiders attribute the recent rise in iron ore prices to the tight supplies. On the one hand, the main iron ore producing countries have reduced their supplies, due to bad weather conditions. On the other hand, although the domestic steel industry showed a tendency to reduce or suspend production, the reduction had rarely been put into action. Most steel mills still continued production, shoring up the ore prices.
Australia and Brazil are the main producers of iron ore. The first quarter is the traditional hurricane season in Australia and the rainy season in Brazil. Fewer iron ore shipments have kept the market supply-demand in a tight balance, according to Wang Yangwen, iron ore index manager of S&P Global Platts.
At present, iron ore inventories at the domestic ports have been about 124 million tonnes, while there were about 140 million tonnes in the same period of last year, said Wang, adding that the epidemic has also weighed on production of the domestic iron ore producers and led to difficult trans-provincial logistics. (Edited by Hu Pingchao, email@example.com)