China’s pellets imports witnessed a sharp increase of 41% m-o-m during Feb’22 to 2.11 million tonnes (mnt) as against 1.5 mnt in Jan’22. China’s cumulative import volume was recorded at 3.61 mn t during the Jan-Feb’22 period.
Pellets shipments into China increased m-o-m on active bookings seen by traders in anticipation of strong demand from Chinese mills. Towards the end of January, before the Chinese New Year holidays, decent deals happened at better realization for February shipments resulting in an increase in import numbers in February.
India remains largest exporter to China – India remained the largest iron ore pellets exporter to China at 1.25 mnt, accounting for 59% out of the total imports during Feb’22.
Ukraine, Brazil and Kazakhstan were the second-largest sources of pellet imports for China at 0.17 mnt each.
China’s pellet imports in Jan’22 and Feb’22
Fig in mn t
Source: SteelMint
Why have imports increased?
- Chinese imports from India rebounded sharply in February as steel mills in northern and eastern China raised the pellet ratios in their blast furnaces during the Winter Olympics.
- However, China’s pellet imports from India might not sustain at such a high level going forward, because Indian pellet producers were heard to be redirecting their pellets to European mills in March, as the Russia-Ukraine war tightened pellet supply into Europe.
- The lower imports into China and the restart of blast furnace operations resulted in iron ore stocks at Chinese ports being drawn down from late February. SteelMint’s pellet export index (Fe 64%, 3% Al, FoB east coast) rose from $136.5/t in early Jan’22 to $153/t by end-Feb’22.
Outlook
China’s worsening Covid-19 situation posed a threat to near-term steel demand and the supply of steelmaking raw materials. Going forward, the speed at which seaborne supply can recover relative to the Chinese downstream steel demand would dictate price direction.
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