Iron ore demand is coming under pressure with a slow down in steel consumption with only 11 vessels chartered to ship iron ore to China last week, 17 fewer than the previous week and 12 fewer than the trailing four-week average.

Inventories of China’s iron ore at 25 major ports dipped 0.12% week-on-week to 93. 07Mt in the week ending Oct 17, according to the Xinhua-China Iron Ore Price Index. The price index for 63.5%Fe content and 58%Fe ore imports both dropped 10 points to 167 points and 138 points, respectively.

The downward trend in China’s iron ore price is expected to continue due to sluggish demand from steel manufacturers and the global economic downturn. The weakening domestic demand from industries such as construction, automobiles and railways will continue to weigh on imported iron ore prices, as a wait-and-see approach has become common among downstream steel consumers.

Iron ore producer giant Vale of Brazil recently said it would scale down its contracting prices of iron ore with Chinese steel companies in the fourth quarter.

63.5% grade iron ore from India has declined US$12 to US$168/t.

Source: China Metals e-mail