Iron ore stocks at Chinese ports not likely to hit new high
Iron ore stocks at Chinese ports have been rising in the past five weeks, but they are not likely to breach the all-time high recorded in August 2011.
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“The volume of stocks came close to the historical high recently, but as steel mills are still maintaining high production rates for now, they are unlikely to set a new record,” an iron ore trader in Beijing said.
“Iron ore stocks at ports will only see a jump if demand from steel mills slumps following production cuts, but we don’t see that happening yet,” he added.
China’s daily crude steel output for June was at 1.966 million tonnes, down only 0.5% from May, according to data released by China Iron & Steel Assn.
“The chance is small for iron ore stocks to jump, as steel mills continue to buy stockpiled cargoes at ports, while traders book fewer overseas cargoes,” an iron ore trader in Hong Kong said.
“Actually, the current stock levels are about one-and-a-half month’s worth for Chinese steel mills, and the volume is within a reasonable range. About 60% of the iron ore at ports belong to steel mills, that is about their one month’s worth,” the trader in Beijing said.
Stocks at Chinese ports increased over the past five consecutive weeks, reaching 98.15 million tonnes by July 6, 2012. This was 0.4%, or 400,000 tonnes, higher than a week earlier.
Compared with June 1, the latest figure represents a 2.1% rise, or 2.05 million tonnes, according to Steelhome.com’s data on China’s 36 ports.
Iron ore stocks at ports hit an all-time high of 98.65 million tonnes on August 12 2011, Steelhome.com said.