The Chinese domestic price of iron ore concentrates continued to rise in the week to Friday, with domestic steel prices hitting over four-year highs early in the week, and Chinese mills still preferred domestic supplies over imported cargoes, market sources said Friday.
Domestic 66%-Fe ore concentrate delivered to steel mills in Tangshan city in northern Hebei province was assessed at Yuan 690-700/dmt Friday, including 17% VAT, from Yuan 660-670/dmt a week ago.
The price rise has been very moderate compared with China's steel prices, market sources agreed.
S&P Global Platts spot price assessment for 18-25mm diameter HRB400 rebar in Beijing, for example, hit a five-year high of Yuan 4,040-4,060/mt Monday, while the Tangshan billet price, a barometer of China's steel market, jumped by around Yuan 300/mt to Yuan 3,850/mt as of Friday.
A procurement official from a steel mill in Hebei reported buying over 70,000 mt of 66% grade iron ore concentrates at about Yuan 690/dmt on Wednesday, and on the same day 50,000 mt of 61.5% Fe imported iron ore fines at a port in north China. But he said domestic concentrates were preferable to imported material both in terms of price and quality.
"Other than higher Fe content than the most liquid Pilbara blend fines, domestic supplies, with the difference in impurities, also consume less supplementary feedstock in steelmaking, thus saving us around Yuan 200/mt in steelmaking," he said.
A procurement official at a second mill in Hebei said domestic iron ore concentrate prices have risen less than imported cargoes -- seaborne and port stocks -- in recent weeks, making them the most competitive.
Nevertheless, domestic steel prices may weaken moderately in the next few days after the China Iron & Steel Association Thursday warned the Chinese market of the risk of overly steep increases, market sources said.
Some parties have made exaggerated cuts to steel supply in response to excess capacity to make money in speculative trading on steel futures, CISA said, stressing that there had been no sign of supply tightness or shortages because of these cuts, nor would there be in the coming months.
