According to report released by Market Operation Department of Chinese Ministry of Commerce, domestic spot ore price has down by 1.96% from May to CNY 1560 per tonne in June. The report also notes that iron ore supply has increased notably in the month but ore consumption weakened. The Customs data shows that China's imported iron ore up by 19.6% YoY to 192 million tonnes in the first five months.
However, the ore price rally has run out of steam due to softening market demand. Domestic crude steel output advances 9.4% to 260 million tonnes through May, while the growth rate dips 10.6 percentage points from same time of last year. Moreover, some mills in North China are to halt production in near future due to Olympic Games. Therefore, China's steel capacity utilization would be restrained in the coming months.
The Department also pointed out that domestic iron ore price might go up further in the short term. However, the price run up would be short lived given current sufficient supply. And the spot ore price is expected to hold steady in days to come.
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