Inventories of steel and iron ore have decreased since the beginning of September. The price of steel wire rod futures has increased by 10 percent, but the market is still far from a turning point.
Latest figures show that up to Oct. 19, inventories of iron ore at 30 major ports are 90.01 million tons, down 0.76 million tons compared to last week, reaching the lowest since the beginning of this year and down by 2.21 million tons compared with the same period last year.
For the steel inventories, five major steel products in 26 major markets totaled 12.7 million tons, dropping for the second consecutive week and decreased by 0.47 million tons. Inventories dropped by 2.17 million tons compared to the same period of last year.
Due to the pick-up in demand for iron ore, the Baltic Dry Index (BDI) rose by 2.12 percent to 1,010 points.
The price recovery of steel products has stimulated production and iron ore market demand. According to the China Iron & Steel Association, daily production of crude steel was 1.92 million tons in the first 10 days of October, up by 0.73 million tons or 4.94 percent compared to last 10 days of September.
Some industry insiders continue to worry about the market as inventories in steel mills are still high, and the market inventories may just be transferred to steel mills.
On the import side, China has imported 65.01 million tons of iron ore, increasing by 7.3 percent, while the imported price has rebounded slightly.
Experts say that since major international steel producers have no plan to reduce production, imported steel prices won't rebound to a large extent. According to China Business News, many private owned steel mills are still cautious about the purchase of iron ore since the macro economy is still in the downturn.
"With the consumption off-season approaching, we'll reduce the purchase of iron ore," a manager of one steel company said.