China, the world’s largest iron ore consumer, recorded imports of the material (incl. pellets) at 561.39 million tonnes (mn t) in the first half of CY’21 (Jan-Jun’21), customs data maintained with SteelMint reveals. Import volumes were slightly up by 2.6% against 547.1 mn t seen in the corresponding period last year. (CPLY).
Imports of the material in Jun’21 were recorded at 89.4 mn t, a decrease of 12% y-o-y as compared to 101.6 mn t in the corresponding month in CY’20. On a monthly basis, the same slipped by 0.4% m-o-m to a 13-month low due to decline in shipments.
Australia, Brazil top exporters
Australia and Brazil continued to be the largest exporters of iron ore and pellets to China during the period under review. Imports from Australia stood at 344.8 mn t, a slight drop of 1.3% y-o-y as compared to 349.5 mn t in Jan-Jun’20. Imports from Brazil were recorded at 108.28 mn t during the period, a sharp 14.2% y-o-y increase compared to 94.8 mn t in CPLY.
Interestingly, India has overtaken South Africa to emerge as the third-largest source of imports to China. China imported 25.8 mn t iron ore and pellets from India in H1CY’21 up by 29% y-o-y against South Africa’s 20.22 mn t.
Imports rise on increased steel output
Steel production in China increased post-pandemic backed by the government’s stimulus projects to boost the country’s economy. China relied on imports of iron ore fines and lump to sustain its ever-growing crude steel production.
China’s crude steel production in Jan-Jun’21 stood at 560.3 mn t, a y-o-y increase of more than 53 mn t. Production in Jan’21 stood at 92 mn t which dropped to 83 mn t in Feb’21. The same in the latter months kept on rising due to robust demand amidst the construction season. In May’21, the country’s crude steel output hit the highest monthly record of 99.5 mn t.
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.
Restocking demand, soaring prices led to higher imports
The benchmark iron ore prices in the spot market remained bullish in the last two months, touching record high levels in May’21 due to strong Chinese demand. The Chinese steelmakers actively booked high- and medium-grade fines during these months to stock up for the monsoon. This resulted in a significant increase in the steelmaking raw material prices in the domestic and spot markets. Buyers started procuring ores from the major exporting countries like Australia, Brazil, India and South Africa.
The average global iron ore fines (Fe 62%) index rose to $214/tonne (t) CFR China in Jun’21, as per SteelMint’s assessment. The hike in prices was largely due to an increase in Chinese iron ore and steel futures.
Outlook
Iron ore imports from China in the coming months are expected to see a drop due to lack of demand in the rainy season coupled with rising steel inventories with mills and possible steel output curbs in H2CY’21. These factors may also pull down iron ore prices from their current high levels.
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