“Moderately improving demand can’t keep up with the surge in steel capacity, leading to falling prices and forcing steelmakers to cut output,” analyst Henry Liu said by phone today from Hong Kong. “We started to hear of such deferrals in the past month.”
China’s crude-steel output soared to a record 61.58 million metric tons in March and declined 1.6 percent to 60.57 million tons last month. Steel prices fell for a fifth-straight week to 4,227 a ton on May 18, according to researcher Beijing Antaike Information Development Co., as April industrial production, new yuan loans and trade figures all missed economists’ estimates.
“We learned from major trading firms that the execution of long-term contracts are stable, while spot market deals have been declining in recent years,” Jim Lin, a Beijing-based analyst at Wood Mackenzie Ltd., said by phone. “We can’t say at this point that such deferrals will become the market trend.”
Iron ore with 62 percent iron content delivered to the Chinese port of Tianjin fell to $131.30 a ton on May 18, the lowest since Dec. 19, according to a price index compiled by The Steel Index Ltd. Iron ore is measured in dry tons, or metric tons less moisture. Tianjin port moisture can account for 8 percent to 10 percent of the ore’s weight.
Thermal-coal buyers in China are also negotiating to defer imports amid a surge in stockpiles, according to three Indonesian sellers of the fuel.
Traders are asking to delay shipments of Indonesian power- station coal for as many as two weeks as stockpiles in China’s main ports are sufficient, said two of the people who declined to be identified because the information is confidential. One buyer asked to reschedule a 50,000-ton cargo for June delivery, according to one of the people.
The Financial Times reported today that buyers of iron ore and thermal coal are asking traders to delay shipments with some defaulting on their contracts, citing unidentified traders.
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