Chinese Steel Association Warns Mills to Buy Iron Ore Rationally

BEIJING, Feb. 27 (Platts) -- The China Iron & Steel Association has called for Chinese steel mills to help contain iron ore prices by purchasing at a rational level, based on the steel industry group's latest market analysis.

CISA said the country's import prices for iron ore showed signs of increases in February "despite the market shifting towards oversupply," the report dated Thursday said.

The association's composite iron ore pricing index showed that the country's iron ore prices by mid-February had risen 3.9% on late January prices, or by 4.4% from the end of last year to 480.58, it said.

High costs in steel making raw materials and ongoing low steel prices due to weak domestic demand will continue to pressure Chinese steel mills, with many of them likely to produce at a loss, the association said.

China's steel inventories rose in January after declines for the previous three consecutive months, up 22% or 2.84 million mt month-on-month to 15.74 million mt by the end of January.

In January, China's iron ore import price dropped 3.4% or $4.80/mt month-on-month to $136.50/mt on average, and the country's domestic concentrate price fell 1% or Yuan 11/mt ($1.70/t) to Yuan 1,059/mt, according to the CISA report.