Generic Hero BannerGeneric Hero Banner
Latest market news

Analysis: Yuan weakness to slow seaborne iron ore trade

  • Market: Metals
  • 20/07/18

A sharp fall in the value of the yuan against the dollar has slowed purchases of spot seaborne iron ore by Chinese mills and traders, while prompting mills to stock up in portside markets.

The yuan fell to Yn6.77 to the dollar today, its second one-year low in as many days. The yuan is now well below the level of Yn6.70 that currency traders had said last week could spur China's central bank the PBOC to intervene to support the currency.

The weaker Chinese currency makes it more expensive to buy dollar-denominated iron ore cargoes using yuan. Portside iron ore traders are particularly reluctant to buy seaborne ores, as they will make losses selling these cargoes in the yuan-based portside markets amid ample stocks and modest demand for most medium and low-grade fines.

Portside trading will not be profitable unless portside iron ore prices rise in the near future or seaborne prices correct sharply, said an east China-based trader.

Concerns about an escalation of the tariff war between the US and China are the immediate driver of weakness in the yuan, but signs of slower growth in the Chinese economy are also having an impact. Industrial output growth in China dropped to 6pc in June from 6.8pc in May, while real estate investment growth slowed to 9.7pc in January-June from 10.2pc in January-May. Infrastructure investment has also been slowing over the past few months and is currently around 7pc, compared with 19pc last year.

Slowing growth could prompt the PBOC to ease monetary policy and pump more credit into the banking system, in a departure from its stated goal of reining in private and public debts. Looser monetary policy tends to weaken a currency by increasing availability of cash in the economy.

Chinese companies are facing a severe liquidity crunch that could prompt the PBOC to increase medium-term lending facilities to banks by Yn4.2 trillion ($620bn) over the next 12 months, Singapore bank DBS said. The PBOC has asked banks to step up lending to smaller companies, many of which are struggling financially.

A PB fines tender was concluded on 18 July at $62.27/dry metric tonne, which would translate to a portside price of Yn480/wet metric tonne. The PB fines price in the portside market was around Yn460-465/wmt. These sharp price differences mean mills now prefer to buy portside fines rather than seaborne spot cargoes, said a Beijing-based trader. "My information is, except for mills that have booked long-term contract cargoes or are situated away from ports, all other mills are buying ores exclusively at ports," added the trader.

The yuan could slide to Yn7 to the dollar in the near term, some market participants said. This would force portside traders to raise offer prices to make profits.

Mills will now slow iron ore purchases unless absolutely necessary, said the manager of a Hebei-based steelmaker. The mill has shelved earlier plans to sell some seaborne cargoes in the portside markets.

Steel mills are making robust profits of around Yn800-1,000/t, which will encourage them to keep output rates at near-peak levels. Mills are unlikely to curb output because of yuan fluctuations but will instead keep iron ore stocks at lower levels in the near term.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
17/03/25

EU prepares CBAM export scheme

EU prepares CBAM export scheme

Brussels, 17 March (Argus) — The European Commission is preparing a "solution" for exported goods under the bloc's carbon border adjustment mechanism (CBAM), to be presented before the end of the year. The commission will also expand the scope of the CBAM to "certain" steel and aluminium-intensive downstream products. The changes to the CBAM will be announced as part of a European steel and metals plan. In a draft of the plan to be formally presented on 19 March, the commission points to the need to address the problem of carbon leakage for CBAM goods exported from the EU to non-EU countries. The draft also notes that the commission is currently "quantifying" risks, before proposing an extension of the CBAM to "certain" steel and aluminium-intensive downstream products, so as to address the risk of European producers relocating outside the bloc to avoid higher carbon costs. The metals plan also announces an anti-circumvention strategy for the CBAM to be presented in the second half of 2025. The commission points to the risk of goods from low-carbon production facilities in non-EU countries being redirected to European customers, while carbon-intensive production continues for other markets. The metals plan also points to the risk of "greenwashing" carbon accounting practices, with "electro-intensive metals production benefiting from market-based instruments to appear low-carbon". The commission put forward proposals last month to simplify the CBAM, exempting some 90pc of the firms currently covered by the mechanism. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more
News

EU steel action plan to introduce melt and pour clause


17/03/25
News
17/03/25

EU steel action plan to introduce melt and pour clause

London, 17 March (Argus) — The European Commission will introduce a "melted and poured" rule as part of its steel and metals action plan, to underpin the effectiveness of its trade defence measures. The rule will mean the origin of goods is determined by the location at which the metal is originally melted, regardless of where it was further processed. This will prevent minimal transformation to evade dumping and other duties and provide greater clarity over the origin of the product, a draft of the plan suggests. The move will clearly have big ramifications for steel, where material produced in countries with duties, such as China, is further processed — for example, from hot-rolled into hot-dip galvanised — before being sent to the EU without paying duties. The commission said it will "remain vigilant, as overcapacities generated under non-market conditions may also have the effect of driving unrelated market-based producers in other third countries to export quantities to the EU that are displaced from their domestic or other traditional non-European markets". And the rule will have major implications for the EU's imports of cold-rolled and hot-dip galvanised, among other products, with one trading firm saying it would be a "game changer". European steel association Eurofer requested a melt and pour on Chinese steel as part of its request for a functional review of the steel safeguard. The commission also will "proactively" open duty investigations based on a "threat of injury" without waiting for material injury to occur. The carbon border adjustment mechanism will be extended to certain downstream products to prevent a shift to downstream goods that then avoid paying the carbon taxes required on upstream products, such as steel. European service centres and distributors have been requesting this move to protect themselves and their customers, which could face greater import penetration without an extension of the measures. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

DRC’s cobalt ban lifts cobalt, nickel product prices


17/03/25
News
17/03/25

DRC’s cobalt ban lifts cobalt, nickel product prices

Singapore, 17 March (Argus) — The suspension of cobalt exports by the Democratic Republic of the Congo (DRC) has bolstered the cobalt market, as well as pushed up prices of nickel products. The DRC suspended cobalt exports for four months effective from 22 February, although cobalt production is likely to remain at normal levels. The news sparked concerns in the market because the DRC is the world's largest cobalt producer, accounting for 75pc of total cobalt output. Market sentiment shored up, with prices of several cobalt and non-cobalt products surging to annual highs. Argus -assessed Chinese prices for 99.8pc grade cobalt metal stood at 235-255 yuan/kg ($32.49-35.26/kg) ex-works on 13 March, the highest level in almost 1.5 years, while Argus cif China assessment for 30pc grade cobalt hydroxide hit a two-year high of $9.50-10.80/lb cif China on the same day. Cobalt prices are expected to remain buoyant if the ban is extended, given DRC's majority share of global cobalt supply. But other products such as nickel sulphate and mixed-hydroxide-precipitate (MHP) also stand to gain from the ban. Argus -assessed Chinese nickel sulphate ex-works prices rose to a five-month high of Yn27,300-28,000/t on 13 March, partly supported by the ban because cobalt sulphate is a by-product of nickel sulphate production, while the Indonesian Nickel Index (INI) for 2-5pc cobalt payable in MHP surged to a record high of $154.80/metric tonne unit (mtu) on 14 March. Indonesia, the world's second-largest cobalt producer, is expected to benefit from the ban given the expansion of its MHP capacity . Market views on the ban were mixed, with some participants expecting prices to continue increasing owing to tighter cobalt supply. But others were less concerned, noting that there was abundant cobalt material outside of the DRC. Participants continued to closely monitor the market for further developments, with speculation on a possible extension of the ban and potential export quotas that could follow. Chinese Co metal prices vs INI MHP Co prices Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

US rejects Australia's critical mineral deal


17/03/25
News
17/03/25

US rejects Australia's critical mineral deal

Sydney, 17 March (Argus) — The US last week rejected a deal with Australia offering access to its critical mineral sector in exchange for a metal tariff exemption, in the lead-up to the former implementing a 25pc tax on steel and aluminium imports. The proposal was not a financial deal, but involved "continued and improved [American] investment in getting access to [Australia's] critical minerals," Australian trade minister Don Farrell said in an interview on 16 March. The US government rejected the deal and refused to grant tariff exemptions for Australia on 12 March, following high-level discussions between officials from the two countries. Farrell has indicated that Australia's government is continuing to seek steel and aluminium tariff exemptions for its metal producers. He spoke to US commerce secretary Howard Lutnick on 14 March, and is scheduled to speak to US trade representative Jamieson Greer about the issue on 17 March. Australian aluminium producers will likely be hurt by the tariffs. US buyers purchased 93,000t of Australian aluminium in 2024, accounting for 10pc of the country's total aluminium exports. Australia's critical minerals proposal comes as US and Ukrainian officials continue to negotiate a deal over access to Ukraine's rare earth reserves. By Avinash Govind Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Argentina’s inflation continues to ease in Feb


14/03/25
News
14/03/25

Argentina’s inflation continues to ease in Feb

Houston, 14 March (Argus) — Argentina's inflation continued to ease in February, falling to its lowest since June 2022. The consumer price index fell to an annualized 66.9pc in February from 84.5pc in January and compared with 117.8pc in December, agency Indec reported on 14 March. Inflation peaked at 292pc in April 2024. On a monthly basis, inflation ticked up by 2.4pc in February from the prior month, when it came in at 2.2pc, the lowest since mid-2020. The government is targetting annual inflation to fall to 20pc for 2025, while international agencies and banks put it above 30pc. Lowering inflation is a central tenet of president Javier Milei's government, in office now 15 months, as it works to grow the economy and attract investment. It is also key to a new deal the government wants with the International Monetary Fund (IMF). The government is forecasting growth in domestic product at 5pc in 2025. The economy contracted by nearly 2pc in 2024, an improvement over the 3.8pc decline forecast by the government and the IMF's estimated 5pc contraction. It is hoping for a flood of investment from an incentive law for large investments (RIGI), which was approved last year as part of an omnibus law to reduce the size of the state. The government expects a minimum of $20bn investment to be approved in 2025. A cornerstone of the improvement is a new agreement with the IMF, which will be used to ease capital controls and pay down the treasury's debt with the central bank. On 11 March, the government submitted a draft decree to Congress for approval of the IMF deal. The decree stated that the new IMF facility would include a repayment period of 10 years with a grace period of four and a half years. The decree does not include amounts, but a report from US investment bank Citi stated that it would be between $15-20bn. The government is still repaying the $44bn agreement with the fund agreed to the previous decade. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more