China Iron & Steel Association anticipated iron ore prices to edge down again for the rest of month on reduced consumption from lower steel output amid the Lunar New Year celebration, according to its monthly analysis report released Wednesday.
"Steel mills have more or less completed iron ore restocking ahead of the Lunar New Year holiday, and this will lead to an end of the recent rebound in iron ore prices since mid-December," CISA said.
And amid the persistent oversupply, iron ore prices will, once again, show moderate declines after the recent recovery, it added.
Meanwhile, iron ore prices have been on a moderate uptrend, with the Platts 62% Fe IODEX rising 75 cents/dry metric ton day on day to be assessed at $44.75/dmt CFR North China on February 3.
Iron ore supply in China is showing signs of a buildup, and the extra tonnage will probably impose downward pressure on prices, according to data released by CISA.
For 2015, China ended up with a surplus of about 180 million mt of iron ore, when it imported 950 million mt of iron ore and domestically produced 370 million mt of iron ore concentrates. But actual iron ore consumption amounted to only 1.14 billion mt last year, based on calculations from the country's pig iron production at 690 million mt, according to CISA.
At the same time, iron ore inventories at the Chinese ports had been on a continuous rise, hitting a 10-month high of 95.58 million mt by the end of January, or up by another 2.54% month on month.
On the other hand, China's daily crude steel output has been on a consistent decline since last November.
Latest statistics from CISA showed that the country's average daily steel output over January 1-20 decreased 2.1% month on month to 1.61 million mt, and the whole month of January will probably show a month-on-month decrease too when the figures are available.
China will be officially closed over February 8-13 for the Lunar New Year celebration but most of steel operations and sales will usually slow down for at least two weeks from February 8, market sources noted.
