WEEKLY: China steel mills' iron ore buying weak
A pointer to this is the fact that blast furnace capacity utilization among the 247 Chinese steel mills Mysteel regularly monitors reversed down over January 28-February 10 after seven weeks of rises, with the rate over the fortnight dropping markedly by 4.94 percentage points to average 76.57% as of February 10, according to Mysteel's latest data.
During the week, some steel producers, including many in North China, had to curtail production further as part of measures to improve the air quality during the Winter Olympic Games (being held in and around Beijing over February 4-20), as reported.
"Inevitably, the lower production diminished the buying interest of many mills for accumulating more iron ore," a Zhejiang-based iron ore trader remarked. "Also, many steelmakers have relatively abundant internal stocks, so they didn't feel any urgent need to buy in the spot market," he added.
For iron ore traders last week, their willingness to speculate on iron ore tonnage was rather hearty in the first half of the survey week, with the traders betting on steelmakers' demand recovery going forward. But when ore prices tumbled late last week, some were inclined to sell stocks at hand to reap whatever profits they could, Mysteel Global noted.
Last week saw iron ore prices oscillate through several highs amid warnings from the central government about commodity price speculation, Mysteel Global observed.
The National Development and Reform Commission (NDRC) had complained on February 9 about the recent unusual uptick in iron ore prices, but after ore prices rallied higher later, the state planner on February 11 was moved to warn again about the price surge, as reported.
Mysteel's Mysteel SEADEX 62% Australian Fines, for example, first fluctuated up to a high of $153.55/dmt CFR Qingdao by February 10 (the highest since August 30 last year). But within a day, the price had eased to $150.2/dmt - though it was still $1.3/dmt up from February 7, the first working day after the Chinese New Year holiday.
Mysteel PORTDEX 62% Australian Fines in Qingdao saw the similar trend, with the price climbing to as high as Yuan 977/dmt ($153.9/t) FOT and including 13% VAT on February 10 - a high since last September 9 - but by Friday had eased to Yuan 963/dmt, just up Yuan 1/wmt from February 7.
Written by Victoria Zou, zyongjia@mysteel.com
Edited by Zhenqi Yang, yangzhenqi@mysteel.com
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