Iron ore futures ended the week in decline due to high port inventory and slow steel demand in China.
The most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange dipped down by 0.63% day-on-day to RMB 785.50 per tonne on Friday.
The steel rebar contract on the Shanghai Futures Exchange remained flattish and gained slightly by 0.78% day-on-day to RMB 3,632 per tonne.
Port inventory at 7-month high
The decline in the paper market was due to trade participants’ concerns over high port inventory, while steel consumption remained slow to drawdown the stockpiles.
According to Mysteel, the iron ore inventory went up another 1.5% or 1.8 million mt on-week to a seven-month high level at 122.4 million mt for the week ended at Oct 15.
The high port inventory was due to the arrival of more shipments from mining majors, which reached 308.2 million mt in Q3, up 3.1% on-quarter and up 2% on-year, according to Platts.
For the Q4, most of the miners like Rio Tinto, BHP and FMG were expected to meet their annual guidance except for Vale which lagged in shipments earlier in the year.
Platts estimated that Vale would need to export around 29.3 million mt/month of iron ore over the balance of the year to meet its tonnage guidance.
Reselling of portside cargoes
Due to the oversupplied market, some traders were heard to be reselling portside cargoes to take advantage of prompt cargoes like for the low-grade fines.
In the meantime, some market participants expected the sintering and production cuts in upcoming winter season to push up the demand toward low alumina Brazilian fines in near term.
Thus, there was some reselling opportunities for Brazilian fines to the southern Chinese mills, as liquidity was low, and traders refrained from taking more seaborne cargoes.