Chinese iron ore futures steadied on Thursday, but rising supplies from top miners and overwhelming port inventories in the world’s top consumer are expected to keep the steelmaking raw material under pressure.
The most active iron ore futures contract for May settlement on the Dalian Commodity Exchange traded unchanged at 319.5 yuan ($48.48) a tonne by 0245 GMT. It has rebounded about 13 percent after hitting a record low at 282.5 yuan on Dec 11.
Top iron ore miners in Australia and Brazil are expanding supplies despite tumbling prices and a gloomy outlook this year.
Iron ore shipments to China through Australia’s Port Hedland rose 1 percent to 32.17 million tonnes in December, Pilbara Ports Authority figures showed on Wednesday.
For all of 2015, shipments to China rose to 377.88 million tonnes from 343.41 million tonnes in 2014, based on Reuters calculations, as top miners are maximizing output to squeeze out smaller rivals and increase market share.
“We believe the low cost Australian exporters will continue to gain seaborne market share at the expense of high cost producers in 2016, thus flattening the cost curve further,” ANZ said in a research note on Thursday.
Iron ore inventories at 42 Chinese ports rose further, up 0.9 percent to 96.869 million tonnes on Thursday from Wednesday, data from industry consultancy Umetal showed, reflecting weakening demand from steel mills.
Spot iron ore for immediate delivery to China’s Tianjin port .IO62-CNI=SI fell for a second straight day, down 0.5 percent to $41.90 a tonne on Wednesday, according to The Steel Index (TSI).
The benchmark rebar futures on the Shanghai Futures Exchange slipped 0.2 percent to 1,773 yuan a tonne by 0245 GMT.