China's domestic price for iron ore concentrates fell by Yuan 40/dry metric ton ($6.20/dmt) or 6.8% over the week, together with the substantial softening in China's domestic steel and seaborne iron ore prices in the week of May 9-13, market sources said Friday.
Platts assessment of China's domestic 66% Fe iron ore concentrates delivered to steel mills in Tangshan city in Hebei province, therefore, declined to Yuan 540-550/dmt as of May 13 from last Friday's Yuan 580-590/dmt, both inclusive of 17% VAT.
"Most of the Chinese mills like us are prepared for the price drop, as the price had surged to such a high level that it seemed too good to be true, so decline will be unavailable and it is only when," a procurement official from a Hebei-based privately-owned steel mill said.
Prices of both seaborne iron ore and Tangshan billet indeed had continued softening over the week, with the seaborne iron ore price being down another $5/dmt to around $55/dmt CFR North China, while China's billet price in Tangshan dropped around Yuan 300/mt to Yuan 1,950/mt as of Friday morning, market sources noted.
"I think we feel more settled now with iron ore and steel prices being back to reasonable levels after shooting up so high, and we feel our feet on the solid ground again," a sales official from an iron ore mining operation in east China's Shandong province said.
Most of Chinese market sources anticipated both iron ore and steel prices to hover at the present level for most of May and June, partly because of the steady demand for steel in May-June.
"May and June are the best months for construction works in China, so the domestic steel demand will not weaver much," an official from an iron ore mining in northeast China's Liaoning province said.
Besides, many Chinese steel mills must have had good order books, so they have more or less their steel output sold out already, he added, admitting that his iron ore sales has slowed down recently, but inventories have been low at the site.
On the other hand, Chinese steel mills, with the hard lessons learned, have refrained from increasing crude steel output despite domestic steel price rebounds in March-April, thus limiting the room for price declines as well, market agreed.
Meanwhile, China's iron ore inventories at the port are estimated to have exceeded 100 million mt, according to China's official statistics.
