Posted on 29 Sep 2020
China’s steelmakers had more or less completed procuring iron ore for consumption over the long National Day holiday on October 1-8 by the week ended September 25, being ready for the possible logistics disruption during the upcoming holiday, market sources noted.
Toward the end of last week, steel mills in East China had retreated from buying iron ore port inventories, according to a Shanghai-based market source.
“Up to now, many Chinese steel mills have set aside relatively sufficient iron ore stocks via earlier bookings especially for seaborne cargoes, and others also replenished more in small quantities when price fell sharply earlier on to guarantee their operations (during the holiday),” he elaborated.
As of September 25, Mysteel’s PORTDEX 62% Fe Australian Fines slid to Yuan 896/wmt FOT Qingdao including 13% VAT, a low since August 3 or down another Yuan 36/wmt on week, and Mysteel’s SEADEX 62% Fe Australian Fines also touched a new low since July 31 on September 23, falling to $114.5/dmt CFR Qingdao.
And by September 23, Mysteel’s bi-weekly survey showed that, imported iron ore sintering fines stocks at China’s 64 blast-furnace mills reversed up to an eight-month high of around 18.5 million tonnes, up 1.95 million tonnes or 11.8% on a fortnight.
By September 24, inventories of imported iron ore of various forms at the 247 mills - including the tonnage at their plants, the ports, and on the water - also increased for the fifth week, up another 3.67 million tonnes on week to around 117 million tonnes, which would be sufficient for their nearly 38 days of utilization at the current daily consumption, as reported.
“Many steel mills in Tangshan do not even plan to stock up much iron ore for the next few weeks, as some estimate their existing inventories will last for another three to five days after the holiday,” a market watcher from Tangshan, North China’s Hebei, pointed out.
Besides, many steel mills in Tangshan have had their iron ore consumption curtailed, as they have reined in their sintering and blast furnace capacity utilization rates since September 22 on the local government’s command to reduce pollution until further notice, according to him.
Moreover, “the local steel mills’ interest in buying more iron ore from ports were also dented last week by the temporary suspension of trucking from the ports in Tangshan as part of the local authorities’ effort to curtail air pollution,” he said.
Over September 21-25, the daily trading volume of imported iron ore port inventories among the 52 Chinese trading houses, thus, dipped by 22.3% on week to an average of 1.16 million tonnes/day, according to Mysteel’s tracking on deals between traders and traders to steel mills.
In the near term, iron ore consumption by the Chinese mill may be easing, as over September 18-24, blast furnace capacity utilization among China’s 247 steel mills dipped for the sixth week, down another 0.56 percentage point on week to an average of 93.69%.
Total iron ore stocks at the 45 Chinese ports, in contrast, grew to a five-month high of 116.2 million tonnes as of September 24, up for the fifth week by another 1.2 million tonnes or 1% on week, as reported.
Under the present circumstances, China’s iron ore traders, especially some small-scale ones, therefore, were actively selling off inventories for margins on noting the continuing declines in iron ore prices, and fewer traders were willing to take in quantities on the growing pessimism in the near-term market outlook, Mysteel Global noted.
Written by Victoria Zou, zyongjia@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
Source:Mysteel Global
