Baosteel to keep 'overpriced' iron-ore inventories at low level

Iron ore prices have been disrupted by speculative capital flows and have seen "excessive gains", according to officials at the company known as Baosteel, speaking during a conference call on Tuesday.

Both benchmark iron-ore futures on the Dalian Commodity Exchange and spot cargoes of iron-ore with 62% iron content surged more than 20% in the first 11 days of May alone, with prices up around 50% so far this year.

Baosteel said the company keeps iron ore inventories within a certain range, with an undisclosed upper limit - which it has reached in the first quarter - and a lower limit some two-million tonnes below.

It will keep inventories at the lower end of the range in the second quarter, officials said, bearing in mind the prospect of a drop in iron-ore prices.

Baosteel, which typically consumes 6.5-million to 7-million tonnes of iron-ore per month, said it currently has less than two months worth of ore in stock.