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“The rapid price falls on the seaborne market has resulted in a narrowing gap with spot port materials,” a trader in Hong Kong told Steel First.

Mainstream Pilbara Blend fines were traded at 480-490 yuan per wet tonne at Tangshan ports on Wednesday November 26, the seaborne market equivalent of $67.90-69.40 per tonne cfr.

Metal Bulletin’s index for 62% Fe seaborne iron ore was at $68.49 per tonne Qingdao on the same day. This means the floor price for port materials is $0.59 per tonne below the index; the range’s ceiling is $0.91 per tonne higher.

On November 12 – half a month ago – seaborne prices were $1.60-3.10 per tonne higher than those for port materials.

Metal Bulletin’s index has shed 10% since November 12, when it was at $76.20 per tonne cfr. Over the same period, prices for port materials fell 6.7%.

“The major reason for the narrowed gap is that most participants have a pessimistic outlook for iron ore, and withdrew from the seaborne market,” a trader based in Shanghai said.

“Mills are not willing to stock up under the current market environment. The finical business of iron ore has also decreased after the Qingdao scandal, so demand is shrinking,” a trader in Singapore said.

Earlier this year, Qingdao port authorities blocked the shipment of some metals as it probed allegations of the fraudulent use of warehouse receipts multiple times to raise finance.

After mills in the northern region resumed production after the Asia-Pacific Economic Cooperation summit in early November, China’s crude steel output saw a slight recovery in the middle of the month. But November’s total output is unlikely to see much change from the preceding month’s level.

Member mills of the China Iron & Steel Assn produced an average of 1.642 million tpd of crude steel during the second ten days of the month, up 0.44% from early November, according to data released by the industry body on Tuesday November 25.