SHANGHAI, Jul 8 (SMM) - The average capacity utilisation rate of domestic mines stood at 59.3% in June 2022, up 1.1% from May. Due to the influence of natural days, the output of iron ore concentrate was 21.6 million mt in June, a decrease of 324,000 mt from the previous month. The output of the state-owned mines was 11.3 million mt, down 2.1% while that of private mines stood at 10.3 million mt, down 0.8%. In the first half of 2022, the domestic cumulative output of iron ore concentrates was 126 million mt, a year-on-year decrease of 1.73 million mt. With the commissioning of new mines and resumption of idled capacity, the iron ore concentrate output is expected to rebound in the second half of the year.
The increase in the capacity utilisation rates in June was mainly contributed by production resumption and the rush to fulfil half-year targets. In June, the capacity utilisation rates of private mines in Hebei, Inner Mongolia, Liaoning, and Shandong, as well as the overall capacity utilisation rates in Anhui, Jiangxi, and Jiangsu all increased. This was the combined result of production resumption by some mines and efforts by state-owned mines to achieve their half-year targets. In contrast, the capacity utilisation rates declined across south-west China, south China, Fujian, Jilin, Henan and Xinjiang for the following four reasons. 1. Some mines were switching from open-pit mining to underground mining or about to run out of iron ore resources, resulting in insufficient supply of ROM and a decline in the quality of ROM. 2. Torrential rainfalls in south China and Henan affected the production of local mines. 3. Some mines and dressing plants in south-west China and Shandong were shut down due to issues regarding their tailings ponds and mining licenses. 4. Steel mills in Xinjiang suffered losses and put their blast furnaces under maintenance, which weighed on the demand for iron ore and prompted local mines to carry out maintenance as well.
SMM believes that the capacity utilisation rates of domestic mines will continue to rise in July. Some mines who resumed their mining activities in June will restart their beneficiation activities as well in July. In response to the Cornerstone Plan, the local governments in central China may accelerate their approval of production resumption. However, the capacity utilisation rates in some areas may decline this month as some mines will undertake maintenance after achieving their half-year targets while weaker demand caused by steel mill maintenance may increase the inventory of some mines and force them to stop or lower their production. Some private mines said that they would consider suspending their production if iron ore prices continue to fall.
