Capacity Utilisation Rate at Iron Ore Mines Rose in Most Regions of Central China

SHANGHAI, Mar 8 (SMM) – In February, the capacity utilisation rate at mines in Henan rose month-on-month, as that at both local state-owned and private mining enterprises increased.

One state-owned mining enterprise stated that the production of its two beneficiation plants was relatively stable in February, with a total concentrates output of 110,000 mt. Despite month-end maintenance undertaken on a monthly basis, it normally lasts for only up to two days. Therefore, the impact on the output is insignificant.

The National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) this year did not restrict their use of explosives. First, they mine underground, and under the premise of taking good safety measures, the impact will not be significant. Second, in order to protect the economy, they are required to step up production.

There has been no concentrates inventory for the time being due to the recent robust demand from steel mills and normal supply to their clients under contracts.

A local private mining company produced 50,000 mt of concentrates in February. The output has rebounded from the previous month, but it has not yet reached full production. The recent strict environmental protection inspections have affected their open-pit mining, resulting in ROM supply shortages. But as sintering and pelletising at steel mills have also been affected by environmental protections, the current concentrates output can still meet its own production needs, reducing the amount of outsourced concentrates. Currently, the mine has no concentrates inventory.

The local capacity utilisation rates are set to rise in March with the easing of environmental production impact.

In February, the capacity utilisation rate in Hubei increased month-on-month. Driven by the demand from steel mills and the increase in the price of imported ore, the price of local concentrates rose by 40-50 yuan/mt at the end of February compared with the end of January. The production enthusiasm for mines was strong.

Production at state-owned mines was relatively stable, while private mines increased production significantly.

One local private mine produced 20,000 mt of concentrates in February, up 67% from the 12,000 mt from the previous month.

However, affected by the coal mine accident in Inner Mongolia, the mines in Xiangyang, Hubei province have conducted special inspections on production safety as required by the emergency management department since March. Some private enterprises have been required to stop production for inspection and rectification, and production has been affected to a certain extent.

Despite the absence of safety production inspection in Huangshi city, explosives supply will be controlled until around mid-March due to the NPC and CPPCC. Consequently, ROM mining was also restricted.

A private mining company said that although they have a certain amount of ROM stock, it is expected that their ROM supply will still be insufficient in March due to explosives control. This will ultimately affect 3,000-4,000 mt of concentrates output. Overall, the capacity utilisation rate in Hubei can barely rise noticeably in March.

Due to the current strong demand from steel mills, they have no concentrates inventory for the time being.

The capacity utilisation rates in Hunan were flat on a month-on-month basis in February. The mines that had not resumed production remained shut currently due to production safety inspections and pending approvals for resumption.

In March, the impact of production safety inspections may weaken after the two political sessions. Encouraged by ore prices, the production resumptions at local mines are expected to accelerate. It is expected that the capacity utilisation rate of local mines in March may have room to rise.