News Room - Steel Industry

Posted on 30 Apr 2010

Iron Ore Prices in China Drop on Government Tightening Concerns

Iron ore prices in China, the biggest consumer, dropped in the past week amid concerns government measures on the property market will curb demand.

 

Domestic prices of the steelmaking ingredient in Tangshan, China’s biggest spot market for the material, fell 6.4 percent to 1,310 yuan ($192) a metric ton yesterday from a record 1,400 yuan on April 20, according to data from Beijing Antaike Information Development Co.

 

The Chinese government this month moved to cool its real estate market after prices surged and the fastest economic growth in almost three years stoked concerns of an asset bubble. Iron ore import prices, which traded at a 21-month high, may drop 30 percent in coming weeks, UBS AG said April 21.

 

“The moves to rein in the property market and expectations of higher interest rates have led to falls in the prices of steel and iron ore,” Ma Haitian, a Beijing-based analyst with Antaike, said by phone. Import prices of iron ore will likely follow the decline in domestic levels, he said.

 

The nation’s securities regulator on April 24 required developers to submit fund-raising plans for review, adding to curbs imposed by the central bank on loans for third-home purchases, increased downpayment requirements and mortgage rates announced this month.

 

Iron ore Imports

 

Weekly import prices of 63.5 percent-content iron ore at Chinese ports have risen for five straight weeks, gaining 1.6 percent last week to $189.50 a ton, according to Metal Bulletin. The prices may reflect what sellers are asking for and are higher than actual transactions, Ma said.

 

Import prices averaged $96.31 a ton in the first quarter, the China Iron & Steel Association said today in a statement issued in Beijing, an increase of 20.7 percent from a year ago

 

The government crackdown on property may damp construction and steel demand. Prices of reinforcing steel bars, used in buildings, fell for six straight days to 4,523 yuan a ton yesterday from 4,585 yuan on April 19, according to Antaike data.

 

Benchmark steel prices in China jumped 20 percent this year. Stockpiles of steel products leapt 34 percent to 10.74 million tons by the end of March from the start of the year, as speculators bet that prices of the material will keep increasing, the China Iron & Steel Association said.

 

The rise in steel stockpiles and prices earlier in the year is “fragile and unstable,” the steel association said. “It can’t be sustained.”

 

Steel inventories have already dropped 9 percent to 9.77 million tons by April 23, Luo Bingsheng, vice chairman of the association, said at a briefing in Beijing today.