Prices of imported lump ore in China continue to hover at a low level, pressed down by high port stocks, a situation that is leading domestic steel mills to consume more lumps recently when iron ore fines are comparatively more expensive, market sources said on Friday. As a result, over July 2-15 the ratio of lump feeds in blast furnaces among the 64 steelmakers Mysteel regularly canvasses across China refreshed a seven-month high of 11.78%, according to Mysteel’s bi-weekly survey.
The price spread between lumps and fines narrowed further, with lump prices dipping quickly, Mysteel Global notes. As of July 16, the spread between 62.5% PB lumps and 61.5% PB fines in Rizhao port had narrowed to a 39-month low of Yuan 34/wmt ($4.9/wmt), Mysteel’s database showed, down by 51.4% from July 1 and 53.4% on month.
Over the survey fortnight, the blast furnaces’ lump feed ratio rose another 0.04 percentage point, and the proportion of sintered fines also increased to 72.59%, up by another 0.36 percentage point over the two weeks.
By contrast, the balance of pellets in the furnace feeds of the 64 mills dipped further to average 15.63%, lower by 0.4 percentage point on fortnight, the survey showed.
“The trading of lumps between steelmakers and traders at ports is active these days, because lump is relatively cost-effective,” a Shandong-based trader in East China said, adding he had imported few PB lumps for sale of late, given the increasing popularity of lumps.
Mysteel’s latest weekly survey over July 10-16 showed that lump stocks at China’s 45 major ports declined for the first time in months, ending the steady increase since March 26. As of July 16, total lump stocks at the ports had thinned by 225,100 tonnes on week to around 24.3 million tonnes, though the stocks were still higher on year by a huge 56.6%.
But a Shanghai-based analyst cautioned that the mills can’t keep lifting their lump ratios forever, pointing out that for technical reasons, the upper limit for the proportion of lump feed in a blast furnace is around 15%.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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