Chinese steel mills ‘cancelling iron ore shipments’
Spot iron ore prices could come under further market pressure as Chinese mills cancel contracted shipments after making cuts to their own steel production.
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Mills have reportedly cancelled shipments after a slump in China’s steel market prompted them to bring forward planned maintenance closures.
Iron ore prices have already fallen to a two-and-a-half year low and could come under further pressure if contracted material makes its way onto the spot market.
“A steel mill said this morning that it will defer one contracted cargo from Rio Tinto this month,” one trader said.
Adding to the jitters in the spot market on Monday August 6, Vale offered large volumes into the spot market: 167,801 tonnes of 64.55% Fe non-screened lump ore and 156,559 tonnes of 62.62% Fe sinter feed fines.
Metal Bulletin’s 62% Fe index started the week with another dip, falling by $0.49 per tonne to $118.97 per tonne.
Another steel mill in Hebei province cancelled one cargo after making production cuts, the steel mill source said.
While some market participants still expect spot iron ore prices to see strong support at about $110 per tonne cfr, on high production costs in China as well as in some new mines overseas, others have lowered their forecasts to $106 per tonne cfr.