Attractiveness of low-grade iron ore to lower costs for Chinese steel mills

Chinese steelmakers, struggling with low profit margins on the sale of their steel products, are increasingly looking for low-grade imported iron ore to reduce production costs.

This move has led to a widening price gap between imported medium-grade iron ore and low-grade iron ore. Chinese steelmakers' profitability has deteriorated over the past few months, prompting them to reduce steel production and focus on cost savings by consuming larger quantities of lower grade iron ore products available at lower prices.

According to Iran Steel, analysts believe that in the short term, most mills will be cautious about replenishing iron ore stocks and buying lower-grade iron ore will remain their priority.