Iron ore prices increase, China's iron ore production reboun
July 21 MetalBiz--According to data, China domestic iron ore output in June rebounded, up 27% month on month, reaching 83.3mln tons.
China's domestic iron ore production has been decreasing for almost a year, because the lower spot prices resulting in domestic mining unprofitable business. However, since China has not reached a formal iron ore contract benchmark prices yet, and thus the spot prices of iron ore this week, rising to $90 / t CFR China, which made China's iron ore producers increase production. China's domestic production loss is expected to be 20-30%, only the state-owned iron ore production utilization can maintain at the appropriate level.
Some market observers are expected in earlier time that the global iron ore mines like Rio Tinto and BHP Billiton will control the delivery to ensure that the iron ore spot prices remained at high level. There are indications showing that the mining business did do since early July, even though Rio Tinto denied this. But the iron ore price is higher than the $80 / t CFR, which make China's iron ore mines have a competition edge again.
In the past few months, record-breaking imports turnover encouraged China's domestic iron ore miners to increase production and restore the iron ore production.
Many large-scale steel mills headquartered along the coast like Shanghai-based Baoshan Iron and Steel, 100% use imported iron ore. The small-sized steel mills in northern China will benefit from the recovery of the domestic iron ore production.
An analyst with a company headquartered in Shanghai noted that with Japanese, S. Korean, or even European steel mills beginning to import raw materials again, the supply of imported iron ore will be tight. He said: "China's steel output is still high, and therefore it is necessary to resume the domestic iron ore production."