The Chinese domestic price of iron ore concentrates surged over the week by Yuan 85/dry mt ($12.40/dmt), or 11.5%, to a 30-month high, mirroring fresh highs for domestic billet and imported iron ore, market sources said Friday.
Domestic 66%-Fe ore concentrate delivered to steel mills in Tangshan in the northern Hebei province reached Yuan 820-830/dmt Friday from Yuan 730-750/dmt a week ago, both inclusive of 17% VAT.
"We raised our sales price to Yuan 820/mt this week on noting that both domestic billet and imported iron ore prices hit multi-month highs on February 21, and nearby steel mills have given in and resumed buying after realizing that all finished steel and raw material prices could well stay strong for the next few weeks," a sales official from an iron ore mining operation in Hebei said.
A sales official from an iron ore mining operation in east China's Shandong province also noted the change of attitude among his steel mill customers.
"Many Chinese steel mills have reduced stocks of raw materials, especially after the Chinese New Year holiday, and what they have may only last until the end of February,," he said. On seeing that both steel and iron ore prices may still have room to grow, they have decided to return to the market to purchase this week."
When imported iron ore price broke above $90/dmt CFR North China for 62% Fe fines in the week of February 12-17, Chinese steel mills were wary about whether it would last, but S&P Global Platts 62% Fe Iron Ore Index assessment surged to a 30-month high at $95.05/dmt CFR North China Tuesday, proving them wrong, market sources admitted.
In the same period, the Tangshan billet price hit Yuan 3,330/mt, also the highest in a couple of years.
Domestic steel prices are expected to stay high in the next few weeks as Beijing maintains strict pollution controls and targets a zero-accident environment in mining and heavy industrial operations ahead of top-level political events in the capital in early March.
In addition, China's determination to remove induction furnaces from the steel industry by June has boosted the confidence of domestic steel mills and supported higher steel prices, in particular long steel products such as rebar and semi-finished steel billet, market sources said.
