Chinese steelmakers continue to keep a tight rein on their inventories of iron ore, with the volume of imported iron ore sintering fines stockpiled at the 64 Chinese steel mills under Mysteel’s weekly survey shrinking to an 8.5-year low of 10.3 million tonnes during February 16-22, down by another 4.3% on week and making for the fifth on-week fall.
Iron ore consumption among makers is currently steady, while their tactic of procuring only enough feeds to meet their near-term production also remains the same, a Shanghai-based market watcher explained.
Mysteel’s tracking showed that daily usage of imported sintering fines at the 64 mills stayed largely unchanged on week at 576,300 tonnes/day on average over February 16-22, up by a minuscule 100 t/d on week.
At the mills’ present rate of consumption, the existing tonnage as of February 22 should be enough to keep them operating for around 17 days, one day shorter than during the previous survey period, Mysteel’s latest survey showed.
The small rise in the steelmakers’ iron ore use resulted from the ramp-up in sintering at some mills resuming blast furnace operations, according to the Shanghai source. However, the uptick was partially offset by curtailed sintering operations at mills in Handan city in North China.
The city government had ordered all mills to curb their sintering activities by 50% from February 17 to deal with deteriorated air quality, and the curb has yet to be lifted, Mysteel Global noted.
On the other hand, steelmakers’ margins on their finished steel sales are still negative, making them indifferent to buying iron ore in larger quantities or at the current high prices, the Shanghai source remarked.
China’s imported iron ore prices have performed strongly recently due to bullish market sentiment, with Mysteel PORTDEX 62% Australian Fines in Qingdao reaching Yuan 926/wmt ($134.3/wmt) FOT and including the 13% VAT on February 22, being Yuan 37/wmt higher on week.
Also, “there’s no hurry for mills to replenish their ore inventories now, because the tradable ore stocks at ports are quite ample,” the source added.
Iron ore stocks held by Chinese traders at 45 Chinese ports under Mysteel’s survey had increased to 82.5 million tonnes by February 16, the highest since last September, the latest survey showed.
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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