China’s giant steel industry reshapes national iron ore demand_ sources
China’s giant steel industry reshapes national iron ore demand: sources
Published by:Norman Fong<>
24 Apr 2025 @ 07:57 UTC
Chinese steelmakers are increasingly motivated to tweak raw material procurement plans to control input costs, amid turbulent prices in the downstream steel market and a marked dip in steelmaking profits over the previous quarters, sources told Fastmarkets. Changes in mill procurement patterns over the previous months have resulted in shifts in demand patterns for iron ore in the Chinese portside market and seaborne markets. Fastmarkets’ explores the latest price trends for iron ore cargoes and what it means for mill buying patterns.
Widening discounts for mid-low grade cargoes from Australia Strong production and delivery volumes from Western Australian miners for mid-low grade iron ore cargoes contributed to a general uptick in supply in the Chinese portside market.
A ramp up of its South Flank projective and a 13% increase in overall productive movement saw BHP’s year-to-date iron ore production increase by 1% in the quarter ending March 2025, according to its operational review released on April 17.
A strong supply chain performance also saw Fortescue’s iron ore production up by 3% to reach 97.1 million tonnes in the first half of its 2025 financial year compared with the previous year.
Iron ore shipments from Australia surged by 20.4% in the trading week between April 7-11, reaching 18 million tonnes, surpassing a previous peak in mid-March 2025, according to a local information provider.
The influx of Australia-origin mid-grade cargoes in the Chinese market following short-term supply squeezes in February has created a fairly strong downward pressure on iron ore prices in the Chinese market, according to sources.
Monthly discounts for low-grade Super Special Fines in April were widened by 2.25% to 14.25%, according to multiple sources.
Similarly, May discounts for Jimblebar fines from BHP were heard to have widened by $0.91 from a discount of $5.31 per tonne in April.
The widening of discounts appears to be more prominent across lower-grade blends compared to other mid-grade blends due to changes in mill demand over the past weeks, a trader in Shanghai said.
Strong demand for mid-grade blend kept prices supported Mid-grade blends had been largely insulated from the across-the-board dip in iron ore prices, sources said.
May discounts for Newman fines were heard to be only $0.41 wider than in April, which were at $2.16 per tonne, reflecting a sharp contrast to the $0.91 widening of discount for Jimblebar fines.
Similarly, a 170,000-tonne cargo of 62% Pilbara Blend fines (PBF) with a laycan between May 25-June 3 traded on a trading platform at the June average of a 62% Fe index plus a premium of $1.30 per tonne.
A Singapore-based trader told Fastmarkets that traded premiums on PBF cargoes have been largely supported by steady demand from seaborne importers, citing strong end user buying interest.
A recent uptick in steelmaking margins across Chinese mills was also noted to be the main reason behind the recent pivot towards mid-grade fines, sources said.
Hot-rolled coil producers and flat steel producers were heard to be earning a profit of about 100-250 yuan per tonne in first half April, following the sharp dip in raw material prices, according to a trader in Beijing.
The trader added that stronger export demand for billets and other finished steel products also contributed to an uptick in steelmaker revenues.
Under significantly less pressure to reduce raw material procurement costs, mills are more amenable to purchase more mid-grade products instead of lower grade sinter fines which come with more impurities, a Singapore-based trader said.
High-grade ore demand continues to take a backseat But the recent uptick in steelmaking margins was not translated into improved demand for high-grade iron ore.
Fastmarkets’ iron ore 65% Fe concentrate premium CFR Qingdao index averaged at a discount of $4.99 per tonne between April 1-24, down by $0.31 per tonne from the average discount in March.
Fastmarkets’ iron ore pellet premium over 65% Fe fines, CFR China index averaged at $10.40 per tonne between April 1-24, down by $0.65 (or 5.88%) from average premiums in March.
High-grade pellet premiums hit its lowest mark in the preceding 5 years in mid-April 2025 in line with weak demand from end users despite the uptick in steel revenues.
Uncertainty over the recent rally in finished steel cargoes and steel billets has largely prevent mills from making fundamental shifts in their procurement patterns to improve blast furnace efficiency, a trader in Hebei said.
As long as sintering costs remain low due to low domestic coke prices, mills are unlikely to make tangible switches to higher-grade material in the short-term, the Hebei-based trader added.
The cost of sintering remains low despite the first round of coke price increase, so there is still no added cost efficiency in switching to the use of pellets at current prices, a second trader in Beijing said.