Steel prices drop as iron-ore build up clogs ports
Wuhan Iron and Steel Group, China’s third largest steelmaker, has cut production by 15 to 20 percent, saying it has only been able to afford spot price iron-ore since January.
Steel prices have been fallen precipitously, with Baosteel cutting April prices for some products by 5 percent, or RMB200 per ton, and Wuhan Steel Friday announcing cuts of between RMB50 and 1,000 per ton. China's steel prices have declined by almost a third since June.
Meanwhile, stocks of iron-ore at have been building up at Chinese ports - which is likely to have the effect tipping iron-ore price negociation into China’s favour. On Friday alone, the volume of iron ore in Chinese ports rose one percent.
Tianjin Nanjiang, which receives the bulk of China’s iron ore imports is now holding an inventory of 250 million tons, 600,000 tons higher than a year ago. Rizhao Port and Qingdao and Hong Kong also greater inventories than last year.
In addition there is a growing volume of iron ore that has not even been unloaded yet. According to Macquarie Bank, last week there were 75 fully laden iron ore ships waiting to dock in China, the most in two years.
Meanwhile, a large number of ships are waiting empty off the coast of India, because Chinese letters of credit are being cancelled and demand has plummeted. According to Steel Business Breifing, 40 to 45 vessels were waiting to be loaded at Haldia port, 100km downriver from Kolkata.
China’s three major Chinese steelmakers have indicated that this year’s annual iron ore talks are likely to drag on, saying they have “no deadline” on which to reach an agreement.
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