The amount of molten iron daily production affected by maintenance at steelmakers has climbed from 78,700 mt to 220,000 mt over the extended Chinese New Year holiday that ended on February 9, according to a SMM survey, as more mills scale back production to contain the spread of coronavirus.
Post-holiday restrictions on raw material shipment and elevated stocks of finished products continued to impact the production of molten iron, with the daily affected volumes rising to 269,000 mt as of February 12. This is expected to reduce demand for iron ore by 457,000 mt per day.
As squeezed profits keep steel mills purchase cautiously and the impact of COVID-19 delayed the resumption of downstream demand, iron ore deliveries from Chinese ports are likely to remain sluggish in the near term, which will keep iron ore prices under pressure.
On the supply front, iron ore shipments leaving Australian ports fell on a weekly basis by 4.6 million mt, to stand at 9.75 million mt during February 2-8, as some ports in Western Australia was temporarily closed due to the impact of a tropical cyclone.
Current stocks of seaborne iron ore at Chinese ports stand 12 million mt lower than a year earlier. This, together with expectations of lower domestic production of iron concentrate in February on virus impact, will see weak demand and supply of iron ore in the short term.
Source: SMM News
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