Iron ore prices in China's futures markets have reached around 710 yuan (approximately 100 dollars) per ton, close to their lowest level in a month. This price drop is due to weak market fundamentals and an oversupply of raw materials.
Increase in Iron Ore Supply
Analyses indicate that the supply of iron ore in the Chinese market remains high. The volume of shipments from the largest supplier, Australia, has increased to over 21 million tons in the past week, contributing to a rise in cargo arrivals at ports.
Industry data also shows that iron ore inventories at seven major ports in Australia and Brazil have increased by 258,000 tons, reaching 11.95 million tons. This increase in inventories indicates an unstable balance between supply and demand in the global iron ore market.
Challenges for Chinese Steel Mills
Meanwhile, Chinese steel mills are facing additional challenges. These mills are experiencing greater losses due to rising coking coal prices and domestic supply constraints, particularly in Shanxi province. Safety inspections and the suspension of mining activities in this region have negatively impacted coal supply and, consequently, steel production.
Moreover, weak demand from China's construction and manufacturing sectors has also led to a decrease in purchases of ferrous metals. This situation has put further pressure on iron ore prices.
However, some analysts believe that iron ore prices may receive support due to expectations of increased restocking by Chinese steel mills ahead of the long Golden Week holiday in early October. This holiday typically leads to an increase in demand for raw materials in the market.
