Chinese mills' imported iron ore use rises marginally

Daily consumption of imported iron ore sintering fines among the 64 Chinese steelmakers under Mysteel's weekly survey rose moderately to average 565,000 tonnes/day over November 2-8, higher by 8,500 t/d or 1.5% on week. Nevertheless, overall demand for iron ore among the sampled mills has softened recently as more makers carry out production cuts, market sources said.

The mild rise in sintering fines use among the surveyed mills mainly reflected their higher consumption of sintered ore compared with that of other ores, an analyst based in Shanghai explained.

During November 2-8, the ratio of sintered ore feeds in blast furnaces among the 64 steelmakers grew by 0.16 percentage point on week to average 73.94%, Mysteel's survey showed. Meanwhile, these mills' use of pellets and lumps both declined over the period.

In fact, in recent weeks more steel mills across the country have chosen to idle their blast furnaces for maintenance, after months of bearing losses on finished steel sales, as reported.

Also, many mills reduced the volume of iron ore they were buying at ports, given the rather high prices that sellers were demanding, Mysteel Global noted. For example, on November 8 Mysteel PORTDEX 62% Australian Fines in Qingdao was at Yuan 973/wmt ($133.5/wmt) FOT and including the 13% VAT, still hovering at a high level despite the small on-week dip of Yuan 2/wmt.

The mills' disinterest in buying meant that so far this week, the volume of iron ore traded at China's major ports has shrunk to an average of 879,733 tonnes/day, 5% lower than last week's average, Mysteel's tracking showed.

On the other hand, the stocks of imported sintering fines being maintained by the 64 sampled mills had swollen to 10.2 million tonnes as of November 8, up by 3.1% on week and rebounding from a two-week drop, according to Mysteel's survey.

Some steel mills in South China received large quantities of seaborne iron ore recently, the source said to explain the rise in mills' ore stocks.

Moreover, the source predicted that steelmakers would slow their iron ore buying further, because their steel stocks are likely to accumulate in the near term as steel consumption slackens ahead of winter. Lower daytime temperatures and snowy weather frequently hamper outdoor construction work in many regions of the country, Mysteel Global notes.

In fact, after hovering at the reasonably high level of over 2.9 million tonnes/week from late last month, apparent domestic consumption of rebar under Mysteel's tracking had retreated to an average of 2.78 million t/w during November 2-8.

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.