en.Wedoany.com Reported - Iron ore lump inventory at Chinese ports has fallen to a seven-month low, with tightening supply pushing up premiums, though steel mills are controlling lump usage to reduce production costs.

Mysteel Global noted that over the past two weeks, the premium for iron ore lump at Chinese ports relative to 62% Fe fines has strengthened significantly. Despite weakening demand from steelmakers, tightening lump supply has been the main driver of this price increase. On May 21, Mysteel assessed the port market premium for 62.5% Fe Australian iron ore lump relative to 62% Fe Australian fines at RMB 1.5905/dmtu (approximately $0.234/dmtu), up RMB 0.4644/dmtu month-on-month.

In recent months, Chinese steelmakers have maintained relatively high blast furnace operating rates, keeping overall demand for iron ore firm. During May 15-21, the capacity utilization rate among the 247 blast furnace steel mills tracked by Mysteel rose by 0.6 percentage points week-on-week for the second consecutive week, reaching 90.3%, the highest since last November. However, actual lump consumption has been declining. As of May 20, Mysteel's survey of 114 blast furnace steel mills showed the lump ratio charged into blast furnaces steadily decreased over the past month to an average of 10.83%, the lowest level since February.

A Shanghai-based market observer noted that rising lump premiums have prompted mills to control usage to cut costs. The lump premium began rising after hitting a multi-year low in early February and has expanded several times since. Meanwhile, rising metallurgical coke prices have also dampened mills' willingness to use lump. Since April, Chinese metallurgical coke prices have increased by RMB 150-165/tonne, with the most recent hike of RMB 50-55/tonne taking effect on May 11.

"Overall, the strength in lump premiums this month is primarily attributed to a significant reduction in supply," the observer explained, noting that port lump inventories have declined sharply since mid-April. As of May 21, lump inventories at the 47 major ports tracked by Mysteel nationwide decreased by 886,200 tonnes (approximately 4.7%) month-on-month to 18.04 million tonnes, hitting a seven-month low. Meanwhile, despite declining overall cost-effectiveness, Newman lump remains popular among steelmakers, which has also supported the overall lump premium.

This article is compiled by Wedoany. All AI citations must indicate the source as "Wedoany". If there is any infringement or other issues, please notify us promptly, and we will modify or delete it accordingly. Email: news@wedoany.com