[SMM Weekly Survey] Iron Ore Resources Scarce, Iron Ore Concentrates Production Slightly Declines

According to an SMM survey, the capacity utilisation rate of domestic mines was 57.7% last week, down 1.3% WoW; iron ore concentrates production was 770,000 mt, down 17,000 mt WoW; sales were 780,000 mt, down 2,000 mt WoW; and in-plant inventory of concentrates was 240,000 mt, down 10,000 mt WoW.

Production: A major mine in North China was forced to halt production at its beneficiation plant due to a lack of ore resources within the group. The current scarcity of ore resources is restricting domestic iron ore concentrates production. Mines need to expand their boundaries to maintain production, but the related procedures are complex, and the resumption period is long. In East China, some mines have completed their monthly production tasks, leading to short-term maintenance at beneficiation plants and a slight decline in production. This week, normal production is expected at most mines and beneficiation plants, and iron ore concentrates production may remain stable.

Sales: Recently, steel mill profits have continued to shrink, and mills are strongly inclined to control costs, mainly purchasing as needed. Mines and beneficiation plants have a strong sentiment to stand firm on quotes, and overall market transactions have been relatively quiet. This week, considering that steel mill inventories are at relatively low levels, there is a need for restocking, which may drive domestic iron ore concentrates transactions.

Overall, domestic iron ore resources remain tight, providing some support for ore prices. The upcoming Politburo and economic meetings are expected to bring positive market sentiment, and the futures market for iron ore is showing a strong trend, which may drive up domestic iron ore concentrates prices.