The Chinese domestic price of iron ore concentrates rose moderately by Yuan 10/dry mt in the week to Friday, with Chinese steel mills preferring the domestically produced higher grade 64-66% concentrates for steelmaking when they enjoy high sales margins, market sources said Friday.
Domestic 66%-Fe ore concentrate delivered to steel mills in Tangshan city in northern Hebei province was assessed at Yuan 610-620/dmt Friday, including 17% VAT, from Yuan 600-610/dmt a week ago.
"We do not mind paying more for domestic iron ore concentrates as our steel sales have been good, with the margin around Yuan 500-600/mt in terms of billet prices, and we prefer higher-grade iron ore for better efficiency in blast furnace operations," a procurement official from a privately owned steel mill in Hebei said.
The company on Wednesday paid Yuan 25/mt more than last week for 30,000 mt of 66% iron ore concentrates.
A sales official from an iron ore mine in east China agreed, saying it had raised list prices by Yuan 20/dmt week on week.
"Our local mills do not mind that we have increased our prices a bit, as their rebar sales prices have been up by Yuan 100/mt over the week, more than enough to cover the cost of concentrate procurement," he said.
In Hebei, the billet price Friday was Yuan 3,180-3,200/mt from Yuan 3,120/mt a week ago.
Despite higher prices, domestic ore miners agreed that domestic supplies are unlikely to surge unless imported iron ore prices rebound above $70/dmt or higher in the coming months.
"We have resumed our idled mining sites since the beginning of this year, and we will not consider investing in new mining projects as it is no longer profitable to expand in the foreseeable future unless global iron ore prices can return and stay at high levels," he said.
However, Chinese market sources say imported ore prices are unlikely to return to the glory days as the market, in essence, is oversupplied nowadays.
In the past couple of weeks, imported iron ore prices have hovered at $54-$56/dmt CFR North China for 62% ferrous content fines, market sources said.
China's run-of-mine iron ore output in the first five months of the year totaled 508.5 million mt, up 10.4% year on year, according to the figures from the National Bureau of Statistics. The growth rate was 12.3% for the first four months of the year.
