The world’s largest steel producer and iron ore consumer China has posted total iron ore imports at over 374 mn t in Jan-Apr’21, as per Chinese customs data compiled by SteelMint. Iron ore imports increased by more than 8% compared to Jan-Apr’20 imports at 346 mn t.
At over 196 mn t, iron ore imports shot up 11% in Mar-Apr’21 compared to the corresponding period last year. Mar’21 imports rose above 100 mn t for the first time since Oct’20.
Imports inch up on increased steel output
China relied on increased imports of iron ore fines and lump to sustain its ever-growing crude steel production, thanks to the government’s post-pandemic fiscal dole stimulating infrastructure and construction activities. Production controls such as crackdown on sintering and suspension of blast furnace capacity in Tangshan have actually done very little to tame rising steel production.
Crude steel production in Jan-Apr’21 stood at 374.6 mn t, with Apr’21 production of 97.8 mn t being 13% higher on year. Production in Mar’21 was recorded at 94.02 mn t – 19% higher on year. China’s share in global crude steel production is over 56%, as per World Steel Association data for 2020, and the country buys more than 70% of all seaborne iron ore. With steel prices on an upswing since the beginning of 2021 (before they started reversing down from mid-May) and rising spreads for mills, iron ore demand remained robust in the period under review.
India’s exports up 89%
Among the major suppliers, Australia retains the top spot with 228.52 mn t of iron ore exports to China in Jan-Apr’21 – largely stable vis-a-vis around 223 mn t in the year-ago period. Although the Dec-Feb cyclone season in Australia impacted supplies, exports recouped to over 60 mn t from Mar’21 onwards compared to 52 mn t per month on average in Jan-Feb.
Despite weather-related disruptions and accidents at ports, exports by the second-largest supplier Brazil increased to 78.11 mn t in Jan-Apr’21 – around 13 mn t higher than the year-ago period. Experts predict that exports by Brazilian miner Vale will take till end-2022 to reach levels seen prior to the Brumadinho dam collapse in Jan’19.
Interestingly, India has overtaken South Africa to emerge as the third-largest iron ore exporter to China in Jan-Apr’21. India’s total exports during the period stood at 15.43 mn t against South Africa’s 14.51 mn t. India’s exports to China increased sharply by over 89% compared to about 8 mn t in the corresponding period last year, data reveals.
Outlook
With the onset of monsoon in China construction activities and thereby steel demand is projected to take a hit. However, it has also been predicted that, going by current trends, steel production could spike in the near term, with Jun’21 daily output expected to remain around 3.2 mn t/day. However, lack of demand due to seasonal factors may result in rising steel stocks with mills that could pull down iron ore prices in H2 2021 from their current high levels.
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