Weak demand drives up iron ore stockpiles

An expert said Wednesday that rising stockpiles of iron ore at Chinese ports indicates dropping iron ore demand due to unfavorable economic conditions.

Inventories of imported iron ore at 25 major Chinese ports stood at 72.49 million tonnes from May 14 to May 20, up 0.81 percent from the previous week, according to the latest data released by the Xinhua News Agency.

Iron ore prices dropped to their lowest level this year. The price index for 63.5-percent-grade iron ore imports dropped 6 points from the previous week to reach 124 points, while the index for 58-percent-grade iron ore dropped 5 points to 109 points, the data showed.

"The growing stockpiles reflect a decline in iron ore demand," said Zeng Jiesheng, an analyst with Mysteel.com, a leading provider of steel market information.

With China's economic situation remaining gloomy and stimulus policies unlikely to be issued, steel companies may have to reduce production, which will further weigh on iron ore prices, Zeng said.

Data from the National Bureau of Statistics showed that China's economic growth slowed to 7.7 percent in the first quarter, down from 7.9 percent in the last quarter of 2012.

China is the world's top iron ore consumer and buyer. It imported 740 million tonnes of the raw material in 2012, up 8.4 percent year on year, data from the General Administration of Customs showed.