The seaborne iron ore market ended a brief two days of gains Thursday as buying activity failed to hold up.
Platts assessed the 62% Fe Iron Ore Index at $103.25/dry mt CFR North China Thursday, down 75 cents/dmt on the day.
Despite spot prices having hit rather low levels, most market participants said they did not believe the demand situation for iron ore had truly improved, saying the earlier brief uptick was a natural rebound after prices went too low.
A Hebei-based steelmaker said buying activity among the end-users was still sluggish, but he had not expected prices to slide so quickly. "Everyone is still very cautious and the volatility is not helping convince people to start buying again."
Mills, especially those in the north of China, are not actively trying to buy seaborne cargoes now," a Zhejiang-based trader said. "They'd rather go to the ports to purchase cargoes because prices are still cheaper there and there are high volumes for the taking."
Port stocks of 61%-Fe Australian Pilbara Blend fines in northern China were heard to have been sold at Yuan 710-720/wmt ($101.25-102.75/dmt on an import parity basis) free-on-truck, including Yuan 35/wmt in port charges and 17% VAT.
Additionally, some sources said there was no lack of spot supply of iron ore as major miners like Australia's Rio Tinto and Brazil's Vale were continually offering cargoes, a factor that was only going to put pressure on prices in the longer term.
"It is like our daily bread," a Singapore-based trader said of the spot offers that were flowing into the market every day.
A Jiangsu-based steelmaker said there were some mills looking to restock iron ore before prices went up more, especially those with low or no long-term tonnage, but he added that the impact of this wave of replenishment was limited. "These mills aren't in any hurry to purchase a lot of volume all at once because they're aware of just how much material there is around," the steelmaker said. "The buying is just trickling in little by little, so there won't be any significant boost to seaborne prices as a result."
Negative sentiment also extended to the steel markets.
Steel rebar futures softened Thursday, with the most actively traded October contract in Shanghai last trading at Yuan 3,131/mt ($509.50/mt), down Yuan 35/mt from Wednesday, and settling at Yuan 3,152/mt, down Yuan 17/mt on the day.
Steel square billet physical prices also lost Yuan 20/mt on the day to Yuan 2,840/mt ($460.75/mt) ex-stock Tangshan, a steelmaker based in the region said.
But a few sources said they thought demand was slightly better, given that prices had reached a level low enough to be palatable for Chinese mills.
"Most people thought that once prices went near $100/dmt [CFR China], a rebound was necessary, otherwise any improvement [in the iron ore and steel markets] would be impossible. Another point is that $100/dmt is the cost of domestic ore," a Hong Kong-based trader said, referring to the point that demand would divert back toward seaborne cargoes once prices were low enough to be competitive with domestic sources of iron ore.
