Chinese steel mills restocking iron ore after holiday

Inventories of imported iron ore stocks at China's 64 steelmakers recovered to around 16.77 million tonnes as of October 15, or slightly higher than the six-month low of 16.08 million tonnes on October 9, as many have been replenishing the in-plant stocks after the long National Day holiday over October 1-8, Mysteel's latest data showed.

Over the survey period, these steelmakers' daily consumption of imported sintering fines recovered slightly by 40,000 tonnes/day or 0.7% on week to 585,100 t/d in total, which was 22.7% higher than a year ago, partly due to the higher steel output this year and the stringent restriction on the steel mills in North China's Hebei province around the same period last year because of serious pollution, according to Mysteel's data.

The stocks are also 9.5% higher on year, which is of little surprise, as the Chinese steel mills' daily iron ore consumption has been on the rise from last year due to higher steel output in 2020, Mysteel Global noted, and the existing volume will be sufficient for about 26 days at the present daily consumption rate, or two days more than the prior week.

"In general, many steel mills did have the need to refill their iron ore stocks to a 'safe' level after eight days of consuming the in-house pile during the long break, so it is rather normal for the latest build-up," a survey conductor shared his observation.

Specifically, the survey showed iron ore stocks at the Chinese steel mills in North and South China increased more remarkably.

"Meanwhile, most of the steel producers including those in North China's Hebei province, are still operating as per normal and will do so as long as possible before they have to observe any restrictive measures in winter to reduce air pollution," a Shanghai-based market source commented.

By October 9, the blast furnace capacity utilization among China's 247 steel mills under Mysteel's weekly survey recovered by 0.17 percentage point from September 30 to 93.2%, the bounce was trivial but this was the first rise after seven weeks of consistent declines, according to the data.

Over October 9-14, spot trading volume of imported iron ore port inventories among China's 52 trading houses averaged 1.42 million t/d, much higher than the trading volume of 853,250 t/d on average over September 27-30, Mysteel's daily tracking showed.

This was more than just restocking needs but also due to the price fluctuation after the long break, Mysteel Global noted, as Mysteel's PORTDEX 62% Fe Australian Fines index, for example, rebounded to as high as Yuan 922/wmt ($137.4/wmt) on October 10, up Yuan 7 from September 30 and then ebbed to Yuan 895/wmt on October 14, both in terms of FOT Qingdao and including 13% VAT.

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