Along with billet price rise in recent period, mines" confidence in ore powder selling has been bolstered, with higher offers of ore powder seen.
However, the rise in ore powder offer is only seen in the active areas such as Qian"an, while there"s no big change in Zunhua and Qianxi. Currently in Qian"an, dry ore powder from large mines is offered at CNY 640 per tonne to CNY 650 per tonne by cash up by CNY 20 per tonne. As Handan Zongheng Iron and Steel and Hebei Jingye Group start to purchase in this area at a high price, local steel manufacturers urgent for pellet making ore powder are forced to pay more, too. As a result, transaction price in this area has inched up. Major ore zones are now going through security check, and qualified mines will soon go into production. In Qian"an, major mines that have worked down all stock are ready to go resume production. However, most mines and dressing plants in Qian"an and Zunhua are reluctant to take actions, given the previous loss high stock and tough selling at present.
Although ore powder market price has posted small rise in Tangshan, only a few local steel manufacturers ever joined in the trade, and most transactions have been made by local liquidity-squeezed steel manufacturers, which are of small and medium size, and by steel manufacturers offering higher price from other areas. So, the transactions are mostly bolstered by steel manufacturers of other areas. On the other side, mines have been stimulated by rapid steel price rises, which induce them to push price high. Last but not least, amid the steel price rise, steel manufacturers have compromised to mines to some extent, thus allowing ore powder price to creep up. At present in Tangshan, trade remains adequate, but from all perspective, it"s not likely to be able to sustain the uptrend in the coming period. The following are the factors and problems raising people"s concern.
1. The state of mind of Tangshan"s mines is not likely to be changed in short term. Coal mines used to gain huge profits previously from the constant increases of ore powder price but now things are different, profit is either badly cut or negative. So it will be long before they can adjust themselves to the reality and lower the offer. During this period, mines will neither produce more nor resume production, and a confrontation will be seen between mines and steel manufacturers.
2. Although ore powder price of other areas has inched up, there"s still a large gap between Tangshan"s low inner price and higher price of other areas. Therefore, steel manufacturers will continue to increase their purchase of that of other areas. There"s no reason for them to purchase powder ore locally. In the background of the large gap, it would be extremely difficult to see any big rise in price. In addition, large amount of ore powder from other areas is piled up at Tangshan"s ports making traders eager to turn it into cash underscoring that price of ore powder from other areas is not likely to go up. Eventually, it may be a trend for price of Tangshan"s ore powder and that of other areas" to come to roughly a same level.
3. There are underlying possibilities for the future ore powder market to deteriorate, and demand may continue to weaken, which in turn, may force mines to squeeze cost for profit. If the future steel market continues to wane, steel manufacturers will have to push down their cost of raw material, too and this is just what will probably happen, as steel manufacturers have entered their low season since Nov and traders and small steel mills are paying their loans. If so, domestic ore powder price will probably decline.
To sum up, ore powder market in Tangshan area will remain flat amid the downtrend background.