A growing number of steelmakers cutting production in China has prompted steel mills to reduce their consumption of direct-charge iron ore - iron ore pellets and lumps, market sources told Fastmarkets.
Earlier in July, several steelmakers in various regions across China told Fastmarkets that they intend to
keep this year's steel output levels from exceeding last year's.
Growing uncertainty
This has caused the iron ore market demand outlook to become increasingly uncertain, with some market participants believing that demand for iron ore will most likely weaken, while others think that the steel production cuts will most likely support both steel and iron ore prices.
Market participants who spoke with Fastmarkets, however, believe that the most direct impact on demand will be on direct-charge materials, namely iron ore pellets and lumps.
High direct-charge prices prompt shift to low-grade fines
"The high prices for iron ore pellets and lumps have caused some cost concerns, so some mills are likely to have reduced their consumption of iron ore pellets and lumps," a northern China mill source said.
A Hong Kong-based trader believes...