China Mills Buy Less Imported Iron Ore as Prices Surge

Chinese steel mills have become more cautious about procuring imported iron ore of late, mainly because prices have risen so quickly, market sources said on Thursday. Thus, the inventories of sintering fines held by the 64 steel mills regularly canvassed by Mysteel had dipped by another 118,500 MT over the week of May 7-13 to reach 16.1 MnT as of Wednesday, according to Mysteel’s weekly survey.

On May 13, Mysteel’s PORTDEX 62% Fe Australian Fines index had reached its highest level since the end of the Chinese New Year holiday on February 2 to settle at Yuan 687/wmt ($96.9/wmt) FOT Qingdao and including the 13% VAT, up by Yuan 23/wmt on week and Yuan 24/wmt on month. The surge chiefly reflected the continuous decline in imported iron ore stocks at port, Mysteel Global noted.

“Recently, trading activity of imported iron ore in the port market was mainly steelmakers buying to meet their urgent needs,” a Shandong-based trader in East China explained, adding that the high prices of imported ore had dulled the appetite of mills to procure them, though the steelmakers’ usage of imported ores continued to rise.

The daily consumption of sintering fines at those 64 Chinese steelmakers under Mysteel’s survey continued to increase over May 7-13 to average 635,600 MT/day, up by 3,700 MT/d on week. As a result, the existing tonnage at the mills will be sufficient to last them for 22 days of consumption at their present rate, one day lower than this time last week.

Moreover, the Shandong trader noted that mills are preferring to use more cost-effective domestic iron ore concentrates, another reason why procurement of imported iron ore among the mills is limited just now. Prices of domestic concentrates are steadier these days when imported ore is becoming more expensive, as Mysteel Global reported.

A market watcher in Tangshan, North China’s Hebei province, agreed that prices of imported ore were rising too fast and that this was cooling the enthusiasm of steelmakers to buy. Looking ahead to near-term price trends, the Shandong trader thought prices would stay at their present high levels until next month.

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.