China’s new state-run agency explores expanding into spot iron ore procurement

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The state-backed China Mineral Resources Group (CMRG) is exploring ways to cooperate with market participants on procuring spot iron ore cargoes, state-owned China Metallurgical news said in an update on its WeChat account late on Tuesday.

Though no further specific details were provided in the update, a push into the spot iron ore market would expand the new state buyer’s ability to secure lower prices on the key steelmaking ingredient for the world’s biggest steel industry, which depends on imports for 80% of its iron ore consumption.

Iron ore supply may increase in the second half of the year as production among the world’s top four miners has ramped up so far this year while exports from countries such as India, Iran and Canada have also climbed, China Metallurgical News said, citing comments from an interview in late July with CMRG Chairman Yao Lin.

Domestic supply is also increasing, Yao added.

The state iron ore buyer, established in July last year, has yet to help manufacturers struggling with weak demand to get lower prices, Reuters has previously reported.

Around 30 Chinese steel mills signed 2023 iron ore procurement contracts through CMRG, but the negotiated volumes were mainly for those bonded by long-term contracts, according to several mill and trader sources, who all required anonymity because of the sensitivity of the matter.

Negotiations for 2024 iron ore purchasing contracts will begin in the coming months, said two of them, declining to disclose any details.

China imported 669.46 million metric tons of iron ore in the first seven months of 2023, up 6.9% on the year, customs data on showed on Tuesday.

The country produced 142.05 million metric tons of iron ore concentrates over January to June, a year-on-year rise of 0.6%, according to data from the country’s Metallurgical Mines Association.

Yao expected industrial profits will improve in the second half of the year, saying crude steel output may fall while steel consumption will be stable over the period.

CMRG is focusing on iron ore procurement, building storage and transportation bases and and constructing a big data platform “in response to current industry pain points”, Yao said, adding that exploration will be expanded to other key mineral resources while deepening the iron ore business.

(By Amy Lv and Andrew Hayley; Editing by Sonali Paul)


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