China's portside iron ore stocks fell by 3.45pc in November, supporting prices.
Portside stocks on 30 November were 140mn t compared with 145mn t on 31 October, the China iron and steel association (Cisa) said. Stocks have been falling since May when they reached 160mn t.
Iron ore prices was seen strongly supported at $60/dry metric tonne (dmt), partly because of tight stocks of mainstream iron ore grades in key Chinese ports. Tightening of stocks this week at the Shandong ports of Qingdao and Rizhao have helped to push prices at these ports higher and at a faster pace than other ports, such as Tangshan and Tianjin.
Mill purchases of ores have been largely focused on portside markets recently. Lower profit margins are prompting mills to operate with iron ore stocks for only 7-15 days of usage and buy smaller volumes from portside markets. Traders have little choice but to land seaborne cargoes and sell them in the yuan-denominated portside markets.
Downward pressure and uncertainty have increased in the Chinese economy, which will prevent any sharp escalation in demand for steel in the near term, so iron ore prices are unlikely to have much upside, Cisa said.
