Imported iron ore lump demand among Chinese steel mills, especially some mills in North China, has strengthened over the past two weeks, according to market sources on Friday, suggesting that the growth likely stemmed from the tough restrictions on steel mills’ sintering operations in North China’s Hebei province.
Poor air quality during the past few weeks had led local government authorities in cities like Tangshan and Handan, the most important steelmaking hubs in Hebei, to frequently advise local steel mills they must curb steelmaking operations, especially sintering operations, to reduce the air pollution emissions, as reported. And over the past several days this week, curbs were even strengthened to the harshest ever announced.
“We heard that some steel mills in Tangshan have consumed more lumps over the past two weeks,” a Tangshan-based market source remarked. “These mills’ sintering operations had been seriously disrupted during the rounds of curbs, leaving them with insufficient sintered ore to meet their blast furnace production needs during the period.”
A Shanghai-based iron ore trader also noted Friday that in seaborne iron ore market, the lump inquiries from steel mills had been active recently.
Mysteel’s latest survey also confirmed a rise in the volume of lumps being fed into the blast furnaces of the 247 steel mills across China, with the ratio reversing up to 12.15% by March 10, or up 0.53 percentage point in a fortnight. The data showed that steel mills in Tangshan were responsible for the majority of the increment, while consumption in other areas remained largely stable.
Mysteel’s other survey also showed that total inventories of iron ore lump at the 45 Chinese ports had declined to 17.75 million tonnes by March 12, down 733,400 tonnes on fortnight and a low since early August 2019. Over the same two weeks, total stocks of ore at the ports had actually increased.
In this context, prices of iron ore lumps have proven to be more resilient than prices of some iron ore fines recently, especially in North China.
As of March 11, the price of 62.5% PB lump at Caofeidian port in Hebei, for example, was assessed at Yuan 1,492/wmt ($229/wmt) FOT and including 13% VAT, down only Yuan 5/wmt on week, while the price of 61.5% PB Fines at the same port had dipped by a larger Yuan 47/wmt on week to Yuan 1,137/wmt as of the same day, according to Mysteel’s assessment.
On March 11, Mysteel’s 62.5% Fe iron ore lump premium against 62% Fe Australian fines hit an all-time high since Mysteel began assessing this premium in November 2013, reaching US cents 50.75/dmtu, or up by US cent 6/dmtu or 13.4% on week. As of the same day, Mysteel SEADEX 62% Australian Fines had dipped to $170.75/dmt CFR Qingdao, down by $7.15/dmt from March 4.
Written by Victoria Zou, zyongjia@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Leave a Reply