SHANGHAI, Apr. 4 (SMM) – The average operating rate at Chinese iron ore mines was up slightly in March from February’s, but the increase was less than the same period a year ago, according to Steelease, Shanghai Metals Market's ferrous branch.
During March, steel mills kept continuing to pressure domestic concentrate suppliers to lower prices, and the current price is now close to the breakeven cost for domestic iron ore mines. These large domestic mines must consider their social responsibility with regard to employment and taxes, so production will not be affected in short term.
However, some private small and mid-scale mines may reduce or even halt production due to high costs and inventory pressures. Some larger-scale mines in Hebei province plan to control inventories by cutting production, while a large number of iron ore mines in Liaoning province are halting sales of concentrate in order to prevent financial losses. Only in Shandong province do mines have relatively stable conditions due to steady demand from steel mills in the surrounding area.
The Steelease survey also found that the price gap between domestic and import ores has widened as a result of the dramatic decline in imported iron ore prices. In Tangshan, Hebei province, domestic ores are now over 100 yuan per tonne higher than imports. In response, steel mills in Tangshan are choosing to purchase imported ores over domestic ores, with the proportion of demand for imported iron ore now exceeding 90%.