SHANGHAI, Mar. 15 (SMM) -- According to data from National Bureau of Statistics (NBS), China’s output of pig iron was 107 million mt during January to February 2012, including 53.42 million mt in January and 54.27 million mt in February. Daily output was 1.7 million mt, far higher than 1.58 million in Q4 2011. Output data from NBS is inconsistent with that from China Iron and Steel Association, an indication that iron ore supply and price shall be further confirmed.
With regard to supply, China’s domestic and imported iron ore totally 163 million mt from January to February 2012, including 153 million of run-of-mine ore, equivalent to 38 million mt of iron ore concentrate after conversion, and 124 million mt of imported iron ore. However, total iron ore demand was as high as 172 million mt during this period, recording a deficit of 9.75 million mt. Theoretically speaking, the deficit shall be made up by spot iron ore at ports. However, data from port seems to unable to make up the deficit as well. Iron ore inventory was only 97.03 million mt at Rizhao port on December 30th, but inventory was as high as 100 million mt in late February, up by 3 million mt. Large dry bulk ports, like Rizhao and Beilun, all reported severe inventory pressure in February, which was not only due to holiday factor but was also caused by steel mills’ low purchasing interest. If iron ore at port failed to make up the deficit, domestic iron ore shall not be counted on as well, as iron ore output was negatively affected since staff at most mine operators were off on holiday during February’s holiday period.
With regard to iron ore prices, if output at steel mills recovered to levels in Q2 and Q3 2011, iron ore prices would rise as well. However, actual iron prices did not advance significantly. Taking prices in Qian’an, Tangshan for example, iron prices were RMB 1,200/mt in late February, only RMB 30/mt higher than levels in December 2011, and even recorded as low as RMB 1,800/mt for a while. Prices for imported iron ore did not increase much either. It was reported that, prices of PB iron ore fines were USD 142.5/mt on February 27th, only RMB 2.5/mt higher from those on January 5th. Steel mills did not increase purchases for iron ore during January to February 2012, and largely made purchases on an as-needed basis and controlled raw materials for 10-15 day’s consumption. Although steel mills slightly increased purchases during the first week after Chinese New Year holiday, most steel mills reduced purchases and adopted a wait-and-attitude later.