With the week long holidays in China last week, the iron ore market remained quiet although some rumors indicted that few cargos were offered during this period.
SteelHome citing data from Chinese Ministry of Industry and Information Technology reported that China imported 686 million tonnes of iron ore in 2011, up by 68 million tonnes or 10.9% from 2010. It said that iron ore import price rose by 28.13% YoY from the 2010 to an average of USD 163.84 CIF which means an additional cost of 25 billion dollars for Chinese steel industry in the year. On the other hand, Chinese domestic iron ore production reached 1327 million tonnes up 283 million tonnes or 27.15％ from 2010.
We are unlikely to see similar performance in 2012, as the Chinese steel production has lost lot of steam in last 6 months with declining MoM trend continuing, thus reducing their requirement of imported iron ore.
But, in the short term, the chances of hike in import prices this week outweigh the possible decline. Iron ore forward swaps rose last week as investors bet on a recovery in spot rates with Chinese steel mills likely to replenish stockpiles when they return next week after the Lunar New Year
Chinese market has already opened on January 29th ie Sunday and the activity in the iron ore market is likely to pick up today giving direction to the market.
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