Posted on 27 Jul 2022
China's domestic iron ore market weakened further during July 18-22, with offering prices falling in most major mining regions under Mysteel's tracking. Market sources said that Chinese steelmakers had successfully levered prices down again as part of their efforts to reduce raw materials procurement costs.
China's domestic iron ore market weakened further during July 18-22, with offering prices falling in most major mining regions under Mysteel's tracking. Market sources said that Chinese steelmakers had successfully levered prices down again as part of their efforts to reduce raw materials procurement costs.
As of July 22, the offering price of 66% Fe grade domestic iron ore concentrates in Tangshan, in North China's Hebei, had dropped for a sixth straight week to reach Yuan 841/dmt ($124.6/dmt) EXW and including the 13% VAT, lower by Yuan 59/dmt on week and touching the lowest level since May 25 2020, according to Mysteel's survey.
In general, steelmakers' demand for domestic ore stayed sluggish last week, with more mills being forced to rein in their output of finished steel and to bank their blast furnaces, under the weight of their thinning sales margins, Mysteel Global noted.
Over July 15-21, the blast furnace capacity utilization rate among the 247 Chinese steel mills canvassed in Mysteel's survey had slipped for the fifth week by another 2.61 percentage points on week to 81.4% – a four-month low, the latest survey showed.
"The same as we've seen in the past few weeks, steel mills with demand for domestic ore continued tabling lower bidding prices last week, hoping to lessen the financial pressure they're under," said a Shanghai-based market source.
Similarly in Northeast China's Liaoning, another leading mining region, the offering price of 66% Fe grade iron ore concentrates had fallen to Yuan 610/wmt EXW and excluding the 13% VAT by July 22, lower by Yuan 35/wmt on week, according to Mysteel's assessment.
Until their margins improve substantially, most mills will adopt the same strategy of only concluding deals for domestic ore in small quantities and at lower prices, according to the source.
"But many mining companies and concentrating mills in regions including Tangshan and Liaoning have halted their production and are refusing to sell their stocks at the low prices being bid currently," he added, saying that the room for prices to dip further may shrink a little this week.
Source:Mysteel Global
