The former consecutive rise in both volume and costs of China’s iron ore imports ended in January when China purchased 59.32Mt of concentrates from abroad, which was 4.79Mt less than in December 2011, and a record low since June 2010.

The average price of concentrate fell to US$136.47/t in January, compared withUS$162.1/t in November, and US$141.2 pt in December. The price is likely to drop still further in the months to come leading mills to postpone further purchases since stocks are high.

Iron ore stocks at major inbound ports in China exceeded 100Mt by mid February, a historical high, and stocks at major steel works in the country are estimated as sufficient for 30 to 45 days at the current rate of consumption. Faced with steadily dropping prices, most mills here are in the mood of wait-and-see instead of eagerly replenishing their stocks. Moreover, the large stocks they have built in periods when prices were still high represent a large portion of working capitals.

Source: China Metals e-mail