China: Domestic iron ore concentrate prices rise after holiday

• Holiday stock drawdown pushes mills to raise buying prices
• Strong futures market supports domestic iron ore sentiment

Mysteel Global: Chinese prices of domestically produced iron ore concentrates strengthened across the country’s major production regions as trading activity has picked up after the May Day holiday over 1-5 May, Mysteel’s latest survey showed.

During 6-9 May, many steelmakers raised their buying prices of domestic iron ore to attract more deliveries from concs suppliers to replenish their feed inventories, Mysteel Global learnt. The mills had been drawing down their own concs stocks to maintain normal operations during the national holiday.

By 6 May, for example, the total inventories of domestic iron ore concentrates held by the 64 blast furnace (BF) steelmakers under Mysteel’s tracking had dropped 2.8% on week to 772,700 tonnes (t).

Consequently, as of 9 May, offering prices of 65% Fe grade iron ore concs in Chengde city in North China’s Hebei province had increased 1.1% from 6 May to RMB 935/dmt ($137.5/dmt) including the 13% VAT, according to Mysteel’s assessment.

On the same day in North China’s Shanxi province, Mysteel assessed offering prices of 65% Fe grade concs in Daixian county at RMB 810/wmt excluding the 13% VAT, up 0.6% from 6 May.

The relatively strong performance of iron ore derivatives also provided some support for spot prices of the concs, Mysteel Global noted.

As of 8 May, the most-traded iron ore contract on the Dalian Commodity Exchange closed at RMB 814.5/t, slightly higher by 0.3% from the settlement price of 6 May, and up by a larger 2.6% from that on 30 April.

However, the steelmakers’ immediate needs for iron ore remain largely flat, as run rates at domestic BF mills were kept stable throughout the past week, Mysteel’s other survey showed.

During 1-7 May, the average capacity utilisation rate among the 247 BF steel producers under Mysteel’s tracking was 89.6%, unchanged from the previous week.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.