China mills' iron ore stocks hit 5-month high

Over December 30-January 12, stocks of imported iron ore sintering fines at the 64 Chinese steelmakers under Mysteel's survey mounted to a five-month high of 15.8 million tonnes, up for the fourth week by another 1.1 million tonnes or 7.3% on fortnight. Market sources attributed the increase in ore stocks to steelmakers' active buying.

"Most steel mills were quite active in procuring iron ore recently, as they wanted to restock sufficient quantities for their smooth production over the Chinese New Year holiday (from January 31 to February 6)," said a Shanghai-based analyst, adding that these mills had consumed their in-plant stocks during the New Year holiday over January 1-3.

Meanwhile, steel producers in North and East China increased their iron ore buying with the gradual resumption of their blast furnace operations, the analyst pointed out.

Over December 31-January 6, the blast furnace capacity utilization rate among China's 247 steel mills rose for the third week by 2.1 percentage points on week to 77.89%, according to Mysteel's latest survey.

"The resumption of blast furnaces was largely driven by the eased production curbs among steelmakers in North and East China, as air quality had improved," she explained.

As a result, the daily consumption of imported fines at the 64 steel mills increased to 491,200 tonnes/day - a high since October 8 2021, or having recovered by 57,800 t/d or 13.3% on fortnight after a four-week dip, Mysteel's survey showed.

At the present rate of consumption, the existing tonnage should be enough to keep the mills operating for around 30 days, same with the previous survey.

"Over the past two weeks, the improving market sentiment boosted by recovered demand from steelmakers had propelled the prices to climb," the analyst said.

For example, as of January 12, Mysteel SEADEX 62% Australian Fines grew to $131.5/dmt CFR Qingdao - the highest since October 11 2021, or up by $14.15/dmt on fortnight.

Written by Lea Li, liye@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.