China: Pellet imports rise over 30% in Q1CY’22 on strong demand

China’s imports of iron pellets witnessed a sharp rise of 33% q-o-q during Q1CY’22 to 5.59 million tonnes (mnt) as against 4.19 mnt in Q4CY’21.

Pellet shipments into China increased on active bookings by traders in anticipation of strong demand from mills for high-grade material, especially pellets, amidst restrictions on sintering ahead of the Winter Olympics.

Steel mills in north China raised pellet ratios in their blast furnaces ahead of the Games.

India largest exporter to China – India remained the largest iron ore pellet exporter to China at 2.77 mnt, accounting for 50% out of total Chinese imports during Q1CY’22.

Kazakhstan was the second-largest source of pellet imports for China at 0.6 mnt followed by Ukraine and Australia at 0.51 mnt and 0.29 mnt, respectively.

China’s pellet imports in Q1 CY’22 and Q4 CY’21

Fig in mnt
Source: SteelMint

Outlook

Lockdown is China due to the upsurge in COVID-19 cases poses a threat to short-term steel demand and the supply of steelmaking raw materials. Going forward, these concerns could resurface and the speed at which seaborne supply can recover relative to downstream steel demand would eventually dictate price direction.

Also, with the squeezing of mill margins, Chinese mills were again seen actively booking low-grade iron ore over the past month.