Posted on 29 Apr 2022
China's climbing coke prices over the past month had been gradually dampening domestic steel mills' consumption of iron ore lumps, with lump prices also showing less resilience compared with those of other iron ore products, according to market sources on Wednesday.
As of April 26, Mysteel's 62.5% Fe iron ore lump premium against 62% Fe Australian fines dipped to $0.29/dmtu, down 23% on month to hit the lowest since late January.
By the same day, the price of 62.5% PB Lump at Qingdao port fell to Yuan 1,240/wmt ($189.1/wmt), down Yuan 110/wmt on month, while the price of 61.5% PB Fines at the same port only eased by Yuan 35/wmt on month to Yuan 930/wmt, both FOT and including 13% VAT and according to Mysteel's assessments.
"The trading of lumps in the seaborne iron ore market is relatively tepid now, with the limited buying largely from steel mills to fulfill their production needs, while traders tend to sell stocks at hand as their profit margins have been declining," a Shanghai-based iron ore trader commented.
"In fact, as Chinese coke prices had been hovering high, some mills have reduced their use of lumps so that they can lower their overall raw material costs," he added.
Higher lump feeds into blast furnaces will consume more coke than sintered iron ore feeds and pellets, Mysteel Global notes.
As of April 26, China's national composite coke price under Mysteel's assessment stood at Yuan 3,990.9/tonne including 13% VAT, or a high since November 3 2021, as domestic coke producers have succeeded in lifting their offering prices on six occasions since February by a total of Yuan 1,200/t, as reported.
Mysteel's latest survey among 114 Chinese steel mills also supported the view that domestic steelmakers had been using less lump in their melts, with the lump portion in their blast furnaces declining by another 0.26 percentage point on week to 10.5% on average as of April 20, or a new low since mid-October 2021.
Source:Mysteel Global
