Domestic iron ore concentrate prices in north China's Hebei province have declined further by an average 5.7% or Yuan 55/dmt ($11) over the week, in response to both lower domestic steel prices as well as weakening imported iron ore prices, market sources said Friday.
Platts assessed the domestic price of 66% Fe iron ore concentrate delivered to steel mills in Hebei's Tangshan city at Yuan 900-920/dmt Friday, compared with Yuan 960-970/dmt on May 9, both including 17% VAT and in terms of cash payment.
A major miner in north China's Hebei province was prompted to cut his offer prices by Yuan 20/dmt this week on noting the dismal domestic steel and iron ore market situation.
Imported iron ore prices, for example, have been hovering around the year low of $102-103/mt for the 62% grade iron ore fines this week, which put pressure on iron ore inventories at the Chinese ports as well domestically produced iron ore concentrate, market sources said.
Sources at China's Hebei iron ore mines and steel mills also admitted that weakening domestic steel prices had forced Chinese mills to cut iron ore procurement prices too.
"Domestic steel demand has not been as robust as expected so far in the second quarter, and many steel mills, for example, have cut their steel sales prices for May and June deliveries accordingly," an iron ore procurement official from a privately owned steel mill in Hebei said.
This has affected their appetite for iron ore, and they are all tight in cash because of the rising steel inventories at the plants, he said.
Chinese steel mills have been burdened with high steel inventories since the beginning of this year, persisting at 15 million mt/m nationwide, partly due to the fact that China's steel trading houses have reduced their speculative buying of steel products on anticipated weakening domestic steel prices this year, a procurement official from a second Hebei mill said.
Market sources expected domestic iron ore prices to stabilize in the coming weeks as the present price level is already close to domestic miners' costs and domestic steel prices are expected to sit in a narrow range.
