China December Iron Ore Output 119 MLN Mt, Expects Drop to Near 100 MLN in January

SHANGHAI, Jan. 18 (SMM) – According to National Bureau of Statistics, China’s iron ore output rose 21.43% YoY but dropped 5.14% MoM to 119.257 million mt in the past December. Despite drops for two consecutive months, the figure has stayed above 100 million mt. China’s iron ore output climbed 27.2% on a yearly basis to approximately 1.327 billion mt for the whole year of 2011.

Major causes for the drop on a monthly basis include: lower operating rates due to cold weather, power supply cuts, for instance in Yishui, Shandong and Qinglong, Qinhuangdao of Hebei, caused by power consumption peaks in winter as well as implementation of energy saving and emission reduction programs and that some mine operators chose to suspend production early ahead of the Chinese New Year and after iron price plunged in October.

Steelease expects China’s iron ore output to see a sharp drop but will stay near 100 million mt this January, given approximately ten days of holidays at various mines, lower production stimulus due to weaker stock replenishment demand ahead of the Chinese New Yea and possible prolonged production suspension at medium to small mines facing high production costs in light of weakness in the iron ore market.