Chinese steelmakers are regaining their appetite for high-grade iron ore despite record-high ore prices, mill managers and traders say, as recovering profit margins spur plants to seek efficiency gains and ramp up output.
Steel firms had been forced to slash input costs through switching to low-quality ore in late 2018 as steel margins dived amid record output. A sharp surge in iron ore prices in early 2019 - sparked by a catastrophic tailings dam failure at a Vale SA mine in Brazil - also fuelled that switch.
"We have signed abundant orders for steel products for the coming three months and steelmaking is quite profitable," said a purchasing manager at a mid-sized mill in China's top steelmaking province of Hebei. "It's time to buy more high-grade ore," he said, declining to be identified as he was not authorised to speak to media.
Beijing's anti-smog drive is also helping.
China's environment ministry last week ordered mills to target ultra-low emission levels to improve air quality, meaning advanced equipment and better quality iron ore.