Baotou Steel may entrust China Mineral for iron ore procurement

Baotou Steel has recently replied to its investors about possible cooperation with the China Mineral Resources Group to negotiate iron ore procurement. This is the first steel plant to specifically entrust China Mineral with joint iron ore procurement negotiation. According to Baotou Steel's 2022 interim report, the company's main revenue was RMB 41.066 billion, an increase of 4.13% y-o-y.

Baotou Steel's main business is the development and extraction of natural resources, as well as the manufacturing and sale of steel products. Baotou Steel produced 16.45 million tonnes (mnt) of crude steel in 2021. Iron ore output from its captive mines stands at 20-25% of total iron ore used. Baotou steel group's domestic procurement accounts for 35% - 40% of total iron ore used; the rest comes from imported ore.

China Mineral Resources Group was officially formed on 25 July 2022. The Group strives to strengthen China's capabilities to ensure the supply of critical mineral resources as a totally state-owned enterprise under the supervision of the central government and a state-sanctioned investment entity. At the moment, its major goal is to concentrate on the iron ore demand of some domestic firms, as well as to unify overseas talks and procurement, in order to increase China's negotiating position for iron ore.

Although the price structure of the domestic steel industry for foreign iron ore procurement has been regularly updated in recent years, the pricing weakness of Chinese enterprises has not fundamentally improved, Because of a serious shortage of domestic resources and a long-term reliance on foreign imports. China's iron ore (including pellets) imports stood at 1,125.6 mn t in CY'21.