Chinese steelmakers stocking up iron ore for steel production

Inventories of imported iron ore stocks at China's 64 steelmakers grew 603,900 tonnes or 3.5% on week to about 17.6 million tonnes as of November 25, according to Mysteel's survey, as some Chinese steel mills are preparing for higher steel output now that short-term restriction on their sintering plants have been removed, market sources shared.

During the survey period over November 19-25, these steelmakers' daily consumption of imported sintering fines recovered by 146,000 tonnes/day or 2.5% on week to 599,200 t/d in total, according to the data.

"Sintering operations at some of the steel mills in North China's Hebei and East China's Shandong had been curbed for a short while just to reduce air pollution," a Shanghai-based market watcher said, but the restriction has been eased starting November 18 as the wind and rain in these regions have helped to clear the air.

"Many affected mills have been eager to resume their sintering operations back to normal, especially when domestic steel prices have been up," he added.

The existing imported iron ore stocks will be sufficient for about 26 days of consumption by the 64 mills at the present daily consumption rate, or unchanged on week, according to Mysteel's survey.

As of now, total imported iron ore stocks at these survey mills are 11.9% higher on year, and the number of consumption days are 1.5% higher on year, matching the higher o-year steel output so far this year as well as indicating the Chinese steel mills' intention to maintain comparatively high steel output now that the domestic demand has remained solid, according to Mysteel's data.

Better-than-usual steel demand saw iron ore prices hold well even in winter months, a Singapore iron ore trader commented.

"To some extent, the iron ore prices have been holding extremely well, hard to imagine that as of now in winter, the seaborne iron ore prices have been hovering above $120/dmt," he said.

As of November 25, Mysteel's SEADEX 62% Fe Australian Fines index was at $127.75/dmt CFR Qingdao, up $0.4/dmt on day, and Mysteel's PORTDEX 62% Fe Australian Fines index stood at Yuan 888/wmt ($135/wmt) FOT Qingdao and including 13% VAT, unchanged on day but Yuan 211/wmt higher on year.

Written by Victoria Zou, zyongjia@mysteel.com

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