Capacity Utilisation Rates Of Chinese Iron Ore Mines To Climb Further In June As Production Resumptions Will Counteract Impact From Safety Checks

SHANGHAI, Jun 14 (SMM) – The average capacity utilisation rate of domestic iron ore mines stood at 55.8% in May, up 1.1 percentage points MoM. The output of iron ore concentrates rose 1.09 million mt MoM to 21.28 million mt in May.

Higher capacity utilisation rates were mainly driven by four factors: 1. Mining activities in some regions, such as Inner Mongolia, Liaoning, and Hebei, picked up after explosives supply was restored. 2. Some mines resumed or ramped up production after being disturbed by environmental protection rectifications or safety checks. 3. Steel mills were more willing to purchase after iron ore prices fell in May, driving mines to increase production. 4. The production efficiency of some dressing plants increased after technological transformation.

The capacity utilisation rates still have upside potential in June. First of all, mines will be more motivated to produce this month, betting on iron ore price rally after sharp drop in May. Secondly, some mines will resume production after being affected by accident earlier and mines who resumed last month will ramp up production this month. However, the capacity utilisation rates of some mines may drop due to regular safety checks.