The Chinese domestic price of iron ore concentrates fell 4.3% or Yuan 30/dry metric ton ($4.6/dmt) on the week, following sharp declines in both domestic steel and seaborne iron ore prices and both in physical and derivatives markets, market sources said Friday.
Domestic 66% Fe ore concentrate delivered to steel mills in Tangshan city in northern Hebei province fell to Yuan 640-680/dmt as of Friday from Yuan 680-700/dmt a week ago, both including 17% value-added tax.
This Friday's domestic concentrate price was close to that in late July, according to the S&P Platts database.
A source at a steel mill in Hebei confirmed buying around 60,000 mt of 66% Fe concentrates at about Yuan 670/dmt delivered to mills on Wednesday, although he said the price could have been Yuan 30/dmt lower if he had waited to Friday.
"China's August economic data showed a bit of a slow-down in the property market and fixed asset investment. But fundamentals have remained sound in general and demand for steel largely unchanged," he said.
A series of declines in steel and iron ore futures magnified these negative factors, with many retail investors holding long positions rushing to take profits over the week, he added.
Over the week, the Platts IODEX for 62% Fe content fines fell more than $10/dmt over the week to $63.15/dmt as of Thursday, and Tangshan billet price fell by around Yuan 300/mt to Yuan 3,520/mt as of Friday, market sources said.
The most-traded January 2018 rebar contract on the Shanghai Futures Exchange also fell Yuan 251/mt between Monday and Friday, exchange data showed.
An official from an iron ore mine in east China said China's domestic steel prices would probably stabilize soon with the billet price in Tangshan, for example, set to hover at around Yuan 3,400-3,500/mt.
China's curbing of steel output in the fourth quarter due to the 19th National Congress of the Communist Party of China on October 18 and pollution controls November 15-March 13 with the provinces of Hebei, Shandong, Shanxi, Henan, Tianjin and Beijing under close watch, would be lending some support to China's domestic steel price, he said.
But the first industrial source said futures tend to exaggerate any changes, big and small, which would most probably lead to price volatility in steel and steelmaking raw materials such as iron ore throughout the fourth quarter.
It is understood that Beijing's efforts at pollution control in the winter months will not only affect sintering and coking in the steelmaking process, but also the cement industry and some construction projects that cause dust pollution, market sources said.
