Chinese steel mills are slowing iron ore purchases and looking for other supply options after the price spike in February. The estimated cost of 62% iron ore at the end of January rose 24% following the collapse of the fateful dam at Vale SA's mine, raising concerns about rock supplies.
On February 11, prices reached their peak - $ 94 per ton. Iron ore traded at $ 86 on March 1, well above the January average of $ 76 and the 2018 average of $ 69.
“We are holding back restocking as current prices are too high,” said a purchasing manager at a large steel mill in China's leading steel province, Hebei.
Chinese producers are concerned that iron ore reserves have recently been declining at an accelerated pace. Meanwhile, they are considering an alternative to iron ore, such as iron sand. So the purchasing manager in Jiangxi said that in order to save money, he was already purchasing sand from Indonesia with a 56 percent iron content.
