World demand for iron ore in Q3 exceeds supply

The world’s leading iron ore miners have sought to supply more to global steel mills, especially in China, during the July to September quarter, but prices for imported iron ore into China have nevertheless skyrocketed to multi-year highs for maritime cargo and inventories ports that clearly demonstrate the phenomenal growth in steel production in the country and, in turn, in the consumption of iron ore.

It cannot be denied that only China, as the world’s largest steel country, has helped offset the blow of the pandemic to the global ferrous community, and it seems that 2020 has turned out to be a good year for the world’s iron ore.

As of September 3, Australian 62% Fe on SEADEX soared to a 6.5-year high of $ 130.75 per tonne, and Qingdao CFR price was $ 99.45-130.75 per tonne in Q3, up from $ 81.7-105.65 per ton. in the second quarter, while Australian PORTDEX 62% Fe peaked in 7.5 years even earlier on 20-21 August, reaching 971 yuan /tonne ($ 147.1 /tonne) FOT Qingdao, including 13% VAT, and hovers around 786-971 yuan /t for July-September, up from 639-813 yuan /t for the second quarter.

Iron ore imports to China, amid strong demand for steel and steel production, have shown a growth momentum since April, when the country’s economy and industrial activity resumed and iron ore imports rose 13% qoq. monthly volume remaining at over 100 million tonnes for three months of the third quarter.

Not only that, the country’s iron ore imports came from many new sources other than Australia and Brazil, typically as countries such as Canada, Russia, India, Ukraine, and Sweden have all sought to export iron ore to China when demand from their of its own steel mills and other businesses has been largely undermined by the ongoing fight against the pandemic.

The rise in iron ore imports is also partly attributable to China’s limited ability to grow its own domestic iron ore concentrates, which also rose 2.6% qoq to about 71.8 million tonnes in the third quarter, according to Mysteel’s tracking of 332 Chinese mining companies.

In contrast, total shipments or sales from the world’s four largest companies during the July-September quarter were virtually unchanged from the same period last year, at about 274.1 million tonnes, or just 0.6% from the previous quarter, as much of the maintenance work was deployed to Australian facilities, but Vale was an exception as its sales of iron ore were up 20.4% quarter-on-quarter.

Vale’s third-quarter iron ore production also hit a new high since Q1 2019, indicating that the company was gradually and steadily recovering from the effects of the dam collapse at the end of January 2019.

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