The prices of L8 and L10 steelmaking pig iron in northern China's Hebei province traded at Yuan 2,470-2,480 ($401-403)/mt on Tuesday, up from Yuan 2,420-2,470/mt on April 1, both inclusive of 17% VAT.
The slight rise in prices was attributed to fewer Chinese steel mills selling pig iron in the spot market. Instead, they are selling billet and slab, the feedstock for long and flat finished steel products, for higher prices, officials from Chinese mills said.
"Pig iron has little value addition, so we'd rather send excess supplies to steel subsidiaries under the same parent company for internal use than sell in the spot market," an official from a steel mill in Hebei explained, adding that Chinese steel mills tend to sell billet and slab to external customers.
Chinese steel mills have seen their finished steel inventories rise as domestic trading houses cut their purchases. Stocks at steel plants were reported at a high level of 15.1 million mt on April 10 though it had fallen by 285,000 mt from April 1, data from the China Iron & Steel Association showed.
High steel inventories were also affecting the companies' cash flow, which was why they were selling billet and slab, an official from a steel mill in central China said. Also, this was expected to reduce the build in stocks, he added.
China's production of pig iron slipped 0.9% year on year in March to 61.6 million mt, and production in the first quarter remained almost unchanged from last year, edging up a mere 0.1% to 179.7 million mt, latest data from the National Bureau of Statistics showed.
