The Chinese Iron and Steel Association (CISA) expects iron ore prices to remain sluggish in the near term thanks to weak demand and high supply.

The China Iron Ore Price Index (CIOPI) dropped 27.28 points to 282.24 on 30 September, down nearly 9% over the August figure and a much bigger decline than in previous months.

The homegrown iron ore price index dropped 3.44% to 269.82 by end-September and the imported iron ore index dropped 10.92% to 287.86 on 30 September.

The CIOPI index averaged 294.86 in September and was down 8.05% when compared with the August figure.

Homegrown concentrates were priced at 694.31 yuan/tonne by 30 September, down 24.68 yuan/tonne from end-August, a 3.43% month-on-month decline. The price of homegrown concentrates averaged 703.37 yuan/tonne throughout September and was down 22.92 yuan/tonne or 3.16% compared with August.

The CIF price of iron ore powder was US$77.75/tonne by 30 September, a fall of US$9.53/tonne, which equates to an 11% decline since end-August.

The monthly average price of imported iron ore was US$82.27/tonne in September, down US$9.05/tonne or 9.91% from August.

CISA says there is little opportunity for Chinese mills to expand production as steel prices and iron ore consumption are both sluggish.

CISA's Composite Steel Price Index recorded 86.35 by end-September following five consecutive months of decline to its lowest level so far this year.

Source: China Metals.