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Chinese steel mills regain taste for high-grade iron ore

May. 22, 2019

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.

Chinese steel mills regain taste for high-grade iron ore

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.

But as China’s economic growth revved up in the first quarter, and tighter anti-pollution measures came into effect, executives gathered an industry conference in Singapore this week also said higher quality - and higher priced - ore is very much back on the menu.

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.

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