Chinese iron ore port inventories increased sharply in the week to 16 October, while lower freight rates helped lift margins on imported material, Hellenic Shipping News reported. The market update pointed to ample supply and weakening spot demand, with steel mills limiting purchases to immediate requirements rather than building stocks.
Inventories across 35 major Chinese ports reached 148.30 million tonnes, an increase of 2.85 million tonnes from the previous week, according to the latest SMM figures cited by the outlet. Average daily outbound volumes from those ports declined by 50,000 tonnes over the same period to 3.185 million tonnes. The report presented the combination of higher inventories and reduced outbound volumes as evidence that spot demand was gradually losing strength.
Average margins on imported iron ore nevertheless edged up to 6.38 yuan per tonne from 6.01 yuan per tonne during the reporting period. Hellenic Shipping News attributed the improvement mainly to lower seaborne premiums for some brands and a reduction in freight rates. The modest increase left import margins in positive territory, despite the softer demand picture reflected in the port data.
Steel mills were reporting clear losses, according to the update, and the durability of the recovery in hot metal production remained uncertain. Buyers were purchasing only as required and showed little willingness to replenish inventories. That cautious approach to procurement accompanied a market in which supplies remained relatively abundant and further accumulation of stocks at ports was expected.
The near-term outlook remained subdued. In the absence of unexpected developments, the report forecast that iron ore prices would trade weakly within a narrow range. It also expected imported iron ore margins to remain slightly positive, following the improvement supported by cheaper freight and lower premiums on selected seaborne brands.