China's iron ore reserves fall due to demand

Iron ore concentrate inventories among China's 186 mining companies, according to a Mysteel study, fell further from May 21 to June 3, by 189,400 tonnes, or 13.4%, to 1.2 million tonnes, a new low since the study began in January. 2019, as the growth as noted by market sources, the demand for these mines exceeded daily production.

However, during the reporting period, their daily concentrate production increased by another 9,400 tons per day in two weeks to 54,600 tons per day, and the utilization rate of enrichment capacity increased by another 1.2 percentage points in two weeks to 69.93% on average. , or both are relatively tall.

“Demand for domestically produced iron ore concentrates, both from domestic steel producers and from pelletizing plants, has been quite high over the past two weeks,” commented a Shanghai-based analyst, and “its price competitiveness relative to imported cargo has been quite attractive for domestic metallurgical plant, ”he added.

China's iron ore prices from both imported and domestic suppliers experienced some volatility along with the fall in domestic steel prices, but imported iron ore showed signs of recovery first starting on May 27, and by June 3, 62% of Mysteel SEADEX's Australian fines had recovered 2. $ 9 /dmt from May 20 to $ 210.85 /dmt.

In contrast, the offer price of 66% domestically produced concentrates in Tangshan, Hebei province in northern China, continued to fall 95 yuan /dmt ($ 14.8 /dmt) from May 20 to 1,485 yuan /dmt EXW including 13% VAT by Thursday.

Despite this, “the prices of domestically produced iron ore concentrate are still at historically high levels, and Chinese mining companies thus continued to enthusiastically maintain high production levels and sell them to steel mills in exchange for fairly high margins. It is not surprising that the concentrate reserves of domestic mining companies are falling, ”the analyst commented.