China's spot iron ore import prices rose to $84-85 per tonne on 63.5% Fe basis this week, up $3-4 per tonne before the holiday break as steelmakers look to raise prices for February and March.But trading remains subdued after the Chinese new Year. The few transactions this week were for small volumes, and traders are uncertain about market prospects despite the apparent confidence of China's leading steelmakers."Stable steel prices and an increase in China's value-added tax on iron ore from 13% to 17% are two reasons for the price increase," said an iron ore trader in Tianjin.
Baosteel Group lifted flat steel prices before Chinese New Year, which boosted market confidence. Wuhan Steel, the fourth-biggest steelmaker, also said it would raise prices for March (MB Feb 5).
BHP Billiton said this week that there were signs that iron ore inventory in China had run down and that Chinese buyers would return to the spot market in bigger numbers (MB Feb 4). But traders in China were sceptical."Most steel mills must have enough stock to last them till mid-February, or even longer," said an iron ore trader in Beijing.
Ample inventory means traders and steel mills remain cautious about importing more iron ore, especially when the uptick in steel prices looks fragile."No one dares to gamble. Even though Chinese domestic steel prices have kept to an upward trend since November, the steel mills are very careful as to how much they should purchase, so the overall atmosphere in the spot market is still thick with uncertainty," an iron ore trader in Shandong province said.
China's iron ore traders were unsurprised that the market was quiet immediately after the Chinese New Year holiday. "Most Chinese companies are still in the festive mood, and will not resume their businesses in full till next week," an iron ore trader in Beijing said.
Freight charges went up a little this week as well from India.
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