China's Iron Ore Concentrate Prices Dip

Offer prices of domestic iron ore concentrates being tabled by Chinese miners in most regions declined over the March 30-April 3 week, dipping by Yuan 10-33/MT ($1.4-4.7/MT) on week, as domestic mills were unwilling to pay high prices for concs when prices of other raw materials including imported iron ore were declining amid the sluggish steel market, according to Mysteel's latest weekly survey. The buying prices from steelmakers were also down by Yuan 10-40/MT on week.

Chinese steel mills continue to face tight cashflow conditions given the decline in steel prices and high levels of stocks at their plants. This had led them to cut procurement prices of raw materials in order to save their steelmaking costs, Mysteel Global understands.

The price of HRB400 20mm dia rebar lost another Yuan 58/MT on week to reach Yuan 3,589/MT and including the 13% VAT as of April 3, Mysteel's database showed. Besides, over March 26-April 1, total stocks of the five major finished steel products held by the 184 steelmakers across China which Mysteel monitors surged to 10.2 MnT also as of April 3, higher by 106.8% on year though down by 6.1% on week.

As a result, prices of domestic concentrates in Northeast China's Liaoning, East China's Shandong and Anhui, and North China's Hebei and Shanxi provinces all decreased on week amid recovering supplies. They were following the downward price trend of other raw materials such as scrap steel, coke, and imported iron ore, a survey respondent said.

An official with a Shandong-based miner admitted his firm had cut their concentrates offer prices last week due to the decrease in imported iron ore prices. "Otherwise, mills would use more imported ore - which is cheaper - rather than domestic concs," he said. Even for Liaoning, an official with a mining company there confirmed that his company reversed down its price of concs by Yuan 10/wmt last week to Yuan 660/wmt excluding VAT, ending several weeks of keeping prices firm when supplies had been tight.

On the other hand, the Shandong miner source said they would not continue to cut their offer price if imported iron ore prices remained largely unchanged, because their stocks are at a low level.

Concentrate stocks being held by domestic miners remain low, as mills have started increasing their consumption of concs after production of these among miners gradually returned to normal, Mysteel Global noted.

Mysteel's latest bi-weekly survey showed over March 20-April 2, iron ore concentrate stocks among the 186 Chinese mining companies under Mysteel's regular survey declined further to 3.4 MnT as of April 2, a new record low since January 2019 when Mysteel commenced the survey. The stocks had thinned by another 462,000 MT or 11.8% on fortnight, making for a third straight survey-period drop.

Table 1: China's iron ore concentrate prices in major production bases

Table 2: China's steel mills' procurement prices in major areas

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