The ratio of lump feeds in blast furnaces among the 64 steelmakers across China under Mysteel’s survey reached a seven-month high of 11.74% over June 18-July 1, market sources remarked on Friday, suggesting that low lump prices had encouraged some domestic steel mills to increase consumption.
Over the survey fortnight, the blast furnaces’ lump feed ratio rose another 0.29 percentage point, according to Mysteel’s latest bi-weekly survey, while the proportion of sintered fines stabilized at 72.23%, reversing up by a tiny 0.09 percentage point over the two weeks.
In contrast, the balance of pellets in the furnace feeds of the 64 mills reversed down from a five-month high to average 16.03%, lower by 0.38 percentage point on fortnight, the survey showed.
“These days, their prices at ports make lumps more cost-effective compared with iron ore fines and pellets,” said a trader in Tianjin, North China, noting that he had observed deals for lumps being negotiated between traders and steelmakers. A procurement official with a mill in Tangshan in Hebei province admitted the mill had lifted its use of lumps for several weeks because the price was appropriate.
“But we may ease back our use of them in the near term, given that using lumps requires us to consume more coking coal whose prices have become expensive recently, thereby raising our total costs,” he said. Smelting lumps in blast furnaces usually requires additional coking coal to keep furnaces in good condition, Mysteel Global understands.
During the survey period, the price spread between lumps and fines narrowed steadily, with lump prices dipping quickly, Mysteel Global notes. As of July 2, that between 62.5% PB lumps and 61.5% PB fines in Rizhao port had narrowed to a nine-month low of Yuan 67/wmt ($9.5/wmt), Mysteel’s database showed, down by 8.1% from June 17 and 32.3% on month.
Mysteel’s composite coke price, conversely, hit a ten-month high of Yuan 1,917.6/tonne and including the 13% VAT as of July 2, up by 2.8% from June 17 and 7.2% on month.
In the near term, lump prices are less likely to increase, because of the high port stocks, a Shanghai-based market source noted. Over June 25-July 2, inventories of lumps at China’s 45 major ports reached 24 million tonnes, up by another 5.5% from June 24 and new record high since Mysteel first conducted the survey in December 2015.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Photo Credit – Word Steel
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