Japan Steel Makers’ Iron Ore Purchase Price Probably to Rise for Jan-Mar

Iron ore price, Japanese steel makers’ purchase, is poised to increase after 2 quarters for January-March 2011 contracts. Spot price has sharply surged in a recent month and reached the highest in a half year. Dealers seem moving to speculative procurement with outlook that iron price rises when Chinese steel price hit bottom. The latest spot price is higher by about 20% than October-December contract price of FOB US$ 127 per tonne. Quarterly price would probably rise. Higher ore cost is posed to press steel makers’ profits against low steel demand and price.

Spot price of Indian powder iron ore was C&F US$ 163 per tonne as of November 16, according to Platz, American information service company. The price has upped by 19% since mid September and exceeded US$ 160 since May.

Japanese steel makers’ ore contracts shifted to quarterly base in fiscal 2010 started in April. The price for January-March 2011 will be decided basically along spot price for September-November. The purchase price decreased by US$ 20 for October-December from July-September, which downed for the first time in fiscal 2010. Now the price is certain to rebound for January-March as long as spot price keeps the high level till the end of November.

Chinese iron ore import decreased by 13% to 45.72 million tonnes in October from September. The import represented 11% lower than the average in the last 12 months and the secondly lowest after August. The low material import seems to indicate Chinese steel makers’ output reductions of steel products.

Iron ore spot price is surging when Karnataka province, India, has stopped iron ore export since July and Chinese steel makers are poised to increase purchase of domestic iron ore before winter. Moreover, Chinese steel makers seem to increase steel output thanks to rising steel market price. Market concerns forecast Chinese steel makers would increase the purchase volume of imported iron ore.