Anecdotal evidence suggesting that Chinese steelmakers have been quietly beefing up their stocks of imported iron ore fines to ensure they have sufficient ore for their current normal production is being supported by the findings of a new Mysteel survey.
The survey results showed that inventories of imported sintering fines at 64 small and medium-sized steelmakers across China grew for a third week this week to reach a six-month high of 16.3 million tonnes as of December 4. This represented a week-on-week increase of 574,300 tonnes or 3.6% and was also 856,900 tonnes or 5.5% higher than during the same week last year.
“Currently, many steelmakers, especially those in North and East China, have the need to accumulate some more iron ore,” a Tangshan-based market watcher remarked. “There are no more additional large-scale production curbs on steel operations for the time being, and meanwhile, the margins on finished steel remain at a relatively high level. Thus, when these mills gradually ramp up operations to produce more steel, their iron ore consumption will also increase,” he explained.
The survey also showed that the daily consumption of imported iron ore sintering fines at these 64 steelmakers averaged 600,800 tonnes/day on December 4, also up 10,500 t/d or 1.8% from November 27 and nearly a six-month high.
Thus, Mysteel’s survey found that the mills’ respective iron ore stocks could last 25 days of consumption on average, or one day shorter on week.
Indeed, compared with this time last year, the production curbs on steel mills – especially those in North China’ Hebei province – are generally less strict. For example, in Tangshan, the local government had allowed three steel mills whose efforts in pollution control it recognized as good to totally exempted from any production restrictions this month. Another 29 steel mills whose environmental protection achievements are less robust were ordered to stop some of their sintering and pelletizing facilities, blast furnaces and lime kilns over December, as Mysteel Global reported.
However, in winter last year only one steelmaker in Tangshan was exempt from any restrictions while another 34 steel mills had to limit their operative blast furnace capacity by around 20%-70% during the whole of the winter cutback period to mid-March.
And prevailing profit margins are certainly encouraging production. As of December 5, Mysteel’s national average benchmark price for HRB 400 20mm dia rebar still stood at Yuan 4,060/tonne ($576.3/t) – though it had softened from its recent high of Yuan 4,196/t on November 25 – which translates to a relatively high margin for many steel mills.
Another Mysteel survey showed that the blast furnace capacity utilization rate among the 247 blast furnace steelmakers across China monitored weekly rose to a 2.5-month high of 80.94% over November 29-December 5, some 1.06 percentage points higher on week and even 2.13 percentage points higher than the same period last year.
This article has been published under article exchange agreement between Mysteel Global and SteelMint.
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