Inventories of imported iron ore sintering fines stockpiled at 64 Chinese steel mills included in Mysteel’s regular survey fell to 13.5 million tonnes over July 14-20, marking the record low since the commencement of the survey in July 2014. Steelmakers’ buying for ore remained slack and they intended to keep their raw material stocks at low levels, sources shared.
Over the latest survey period, stocks of these fines at the sampled mills had thinned for the second week by another 521,100 tonnes or 3.7% on week. Among the six surveyed regions, mills in regions such as Handan, Xingtai and Tangshan in North China’s Hebei province and East China’s Shandong province saw their ore stocks dip during the period.
Most steelmakers’ interest in ore procurement stayed low, as they were still suffering losses on sales of finished steel, and weak demand from downstream users has yet to improve markedly during the off-season for steel consumption, Mysteel Global noted.
For example, the gross profit on billet sales among integrated steel mills in Tangshan, a top steel production city and billet supply base in China, was still at an average loss of Yuan 303/tonne ($44.8/t) as of July 20 after the on-week recovery of Yuan 29/t, Mysteel’s tracking showed.
Consequently, the average daily iron ore discharge rate from 45 major ports across China decreased to 2.7 million tonnes/day over July 8-14, hitting a new low since April 1 or down by 5% on week, according to Mysteel’s survey.
Meanwhile, “mills have been attempting to bring down their stock levels of iron ore in that they had planned to cut their steel output,” said a Shanghai-based market watcher, adding that some mills have also started selling their excess ore at hand to reduce financial risks.
With mills’ profit margins being persistently eroded, more of them have decided to rein in steel output and carry out maintenance on their steelmaking facilities, which led to the decline in their ore use, the source observed.
Over July 14-20, the daily consumption of imported iron ore sintering fines at the 64 surveyed steelmakers had dropped for the third week by 19,300 tonnes/day or 3.8% from the prior week to 491,300 t/d on average – the lowest since March 11, Mysteel’s survey results showed.
Meanwhile, inventories of iron ore fines held by these mills were sufficient for 23 days of use at their present daily consumption rate, one day lower than the prior survey period.
Written by Lea Li, liye@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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