China, the world’s largest iron ore consumer, recorded imports of the material (including pellets) at 933.48 million tonnes (mn t) in Jan-Oct’21, according to the General Administration of Customs. Import volumes were down by 4% y-o-y against 975.2 mn t seen in the corresponding period last year (CPLY).
Imports of iron ore in Oct’21 were recorded at 91.61 mn t, a decrease of 4% m-o-m as compared to 95.61 mn t in Sept’21. On a yearly basis, the same slipped by 14% y-o-y.
Fall in imports was due to decreased demand amid production curbs and slowdown in construction activities. According to China Iron and Steel Association (CISA) data, the average daily crude steel output of key enterprises was at 1.73 mn t in late-Oct’21, a decrease of 139,400 tonnes or 7.43% from the previous month. Average daily steel production in late-October decreased by 19.53% y-o-y.
Another reason behind the fall in Chinese import volumes is the decline in shipments from the key exporters. Brazil’s iron ore export volumes fell in Oct’21. According to Brazil customs, export volumes stood at 30.86 mn t in October, down 8% m-o-m against September.
China spot iron ore prices stable in Oct’21
The average global iron ore fines (Fe 62%) index stood at $122/tonne (t) CFR China in Oct’21 as against $121/t, CFR China in Sept’21, as per SteelMint’s assessment. Buying interest waned in the market as sources saw further downside from the winter production controls announced in the last week of October.
There were expectations of better demand for the discounted medium-grade fines. The lower premiums, due to increased supply, were expected to increase cost efficienes and encourage higher procurement levels.
Opinions on lump premiums remained mixed. Some sources expected lump demand to increase in the upcoming month due to higher pellet prices and sintering restrictions. However, given the recent fall in coking coal prices and steel production curbs in China, lump demand was heard to be leaning towards the lower side now and weighing on premiums.
Outlook
Measures to curb air pollution in autumn and winter will be stronger and extend over a longer period . Therefore, a decline in iron ore imports from China is expected in the coming months especially against the backdrop of the ongoing production curbs.
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