China's run-of-mine iron ore output fell by 7.7% on year in 2015 to 1.38 billion mt, latest data released by the National Bureau of Statistics Monday showed.
The fall was less than the minimum 10% drop expected by market participants. The decline in 2015, however, was in contrast to the 3.9% year-on-year rise seen in 2014.
China's independent iron ore miners suffered most due to the low price environment and had to shut mines towards the end of last year.
"I shut my three mines one after another over November-December 2015, so for my own operations, [the output decline] is even more than 10%," a source at a 2 million mt/year iron ore mine in Liaoning province said Tuesday.
With price of 64%-Fe iron ore concentrate dropping below Yuan 300/wet mt ($46/wmt) in Liaoning, the source said it was meaningless to keep mines in operation amid stiff competition from better and more affordable Australian and Brazilian iron ore imports.
Australian and Brazilian iron ore supplies accounted for about 85% of the country's total consumption in 2015, up from around 65% a decade ago, according to official data.
China's iron ore concentrates typically have 64-66% ferrous content and are used for either sintering or pelletizing.
The steel mills, on the other hand, were not impacted much.
A North China steel mill's mining operation source said their run-of-mine iron ore output had, in fact, gone up in 2015.
"We sold all our iron ore output to our steel mills, so we have not resorted to production cuts. Most of the mines that belong to Chinese steel mills have been running more or less at full rates," he said.
China's steel mills own 70%-80% of the country's total run-of-mine iron ore production capacity, according to industry sources. As such, most of the mines will keep operating as long as they can supply their concentrates to their own downstream processes, and will be little impacted by slump in international prices, add the sources.
China's iron ore mining operations are mainly located in the provinces of Liaoning, Hebei, Anhui, Shandong, Inner Mongolia and Sichuan. Independent mines located in Anhui and Shandong were hurt the most by the price declines in 2015, market sources said.
