The Chinese domestic price of iron ore concentrates rose by another Yuan 15/dry metric ton ($2.30/dmt), or 2.2%, on the week, the highest level since April 7, with domestic suppliers hopeful for a firm market in September, market sources said Friday.
Domestic 66%-Fe ore concentrate delivered to steel mills in Tangshan City in northern Hebei province was assessed at Yuan 700-720/dmt Friday, up from Yuan 690-700/dmt as of last Friday, both including 17% value-added tax.
The price rise in domestic iron ore concentrate, though hitting a four-month high, has been very moderate when China's domestic steel prices have been hovering at four- or five-year highs, market sources said.
"China's domestic steel prices have been fluctuating in the past two weeks or so, but they have always managed to reclaim their high grounds after losing a couple of hundred yuan, indicating that domestic steel prices have strong back-up, though it may be partly sentiment-driven," a sales official from an iron ore mine in north China commented.
The S&P Global Platts spot price assessment for the 18-25 mm diameter HRB400 rebar, for example, was at Yuan 4,090-4,100/mt ($614-615/mt) ex-stock actual weight including 17% VAT as of August 25, hitting a five-year high.
The Tangshan billet price, a barometer of China's steel market, recovered to around Yuan 3800/mt this Friday after dropping to around Yuan 3,700/mt in mid-August from a multi-year high at Yuan 3,850/dmt August 10, according to S&P Global Platts data.
The rebound had greatly to do with the latest notice from China's Ministry of Environmental Protection on curbing coal consumption by small boilers and power houses and steel capacity operations by a maximum of 50% in the provinces of Shandong, Shanxi, Hebei and Henan, and the municipalities of Beijing and Tianjin over November 15-March 15, the winter months when China is faced with the most serious smoggy days.
"We are not sure how the local authorities will carry out such measures, but this has added to market speculation over tight supply or even shortage of some steel products, thus pushing domestic prices up," a procurement official from a steel mill in north China said.
Besides, Beijing will be holding the 19th National Congress of the Communist Party of China around October-November, when China will elect its party leadership, and safety at mining operations and steel mills will be best assured by limiting supplies of explosives, market sources shared, which is expected to affect normal operations in the steel sector as well.
With all these factors, Chinese market sources are confident in the domestic steel market remaining strong in September, which will be supportive to all raw material prices including domestic iron ore concentrates, they added.
