China: BF mills’ imported iron ore stocks hit 7-month high

• Mills accelerate iron ore purchases ahead of holidays
• Weak steel margins limit iron ore consumption growth

China’s integrated steelmakers continued to build up their inventories of imported iron ore sintering fines ahead of the upcoming national holidays, Mysteel’s latest survey showed, while their daily consumption of the feedstock retreated slightly.

As of 23 September, total stocks of imported iron ore sintering fines held by the 64 Chinese blast-furnace (BF) steel mills under Mysteel’s tracking had risen for the fourth straight week to hit a seven-month high of 15.3 million tonnes, up 6.1% from a week earlier.

With China’s Mid-Autumn Festival (25-27 September) and National Day (1-7 October) holidays approaching, domestic BF mills have ramped up procurement of raw materials to ensure stable production during the holiday break.

Lower imported iron ore prices also encouraged Chinese BF mills to purchase more feedstock from traders, Mysteel Global noted.

As of Wednesday, Mysteel PORTDEX 62% Australian Fines settled at RMB 681/wmt ($101.5/wmt) FOT including the 13% VAT, lower by 0.9% from last Friday.

However, iron ore consumption at Chinese BF mills slightly decreased during the survey week, as steelmakers’ production remained subdued amid negative profit margins.

Over 17-23 September, the daily usage of imported iron ore sintering fines at the 64 domestic BF mills under Mysteel’s tracking averaged 618,400 tonnes/day, lower by 0.7% from the prior week.

The decline in consumption came despite the mills’ stronger appetite for sintering ores. During the same survey period, the ratio of sinter ore in BF feed among the 64 steelmakers increased for the second straight week, by another 0.27 percentage point on week to average 73.41%, Mysteel’s survey showed.

At the current consumption rate, the 64 survey mills could maintain production for about 27 days with their existing stocks of imported sintering fines, up by 4 days from the previous period, Mysteel assessed.

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