According to General Administration of Customs, China – the world’s largest iron ore consumer and importer recorded fall of 4% in iron ore imports to 260.8 MnT in Q1 CY19 against 270.4 MnT in Q1 CY’18. On quarterly basis import volumes has dropped marginally against 261.3 MnT in Q4 CY18.
Why Import volumes to China fell ?
1. Supply disruption from Brazil: Vale underwent collapse at its dam at Corrego do Feijao mine in Minas Gerais in Brumadinho, Brazil on 25th Jan’19. Following, the collapse, operation at numerous mines and dams owned by the miner were put to halt and force majeure was declared for few contracts. On similar grounds, towards end of Mar’19, Vale reduced estimate on its iron ore sales volume for 2019 between 307 and 332 MnT. This is lower by 75 MnT against its previous estimated forecast.
2. Australian iron ore exports fell sharply amidst weather disruption: Western Australia’s Pilbara region was hit by cyclone veronica towards Mar’19 end leading to suspension of major exporting ports Port Hedland, Dampier and Cape Lambert. Average iron ore prices increased sharply in Q1 CY19 amidst global shortage.
Spot iron ore price increased sharply: The average iron ore prices in Q1CY19 increased 15% to USD 82.3 /MT, CNF China as against USD 71.74/MT, CNF China in Q4 CY’18 amidst shortage from largest miners in Brazil and Australia. Monthly average global iron ore fines (Fe 62%) prices in Mar’19 was almost stable at higher avg. prices to USD 86/MT, CFR China in line with last month assessment.
However, China iron ore & pellet imports for Mar’19 recorded at 86.42 MnT. The imports increased 4% M-o-M as against 83.08 MnT in Feb’19. The rise is due to re-stocking by Chinese mills before winter production restrictions ended in April. Besides, April is marked by highest construction activities in China also led to increased imports by the mills for the month.
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