China’s imports of pellets and concentrates dropped 33% y-o-y to 12.3 million tonnes (mnt) in January-September, 2022 as against 18.33 mnt recorded in the corresponding period last year (CPLY), according to the General Administration of Customs.
Imports fell y-o-y due to sustained crude steel production cuts, slow bookings by traders in anticipation of weak demand from Chinese mills and preference for low/medium grade ore due to shrinking steel margins.
However, the country’s imports rose 12% m-o-m to 1.04 mnt as against 0.93 mnt in August.
India remained the largest source of pellet imports for China at 4.15 mnt in January-September as against 6.58 mnt in CPLY. However, imports from India remained nil in August-September. Kazakhstan was the second-largest supplier at 1.57 mnt followed by Australia at 1.28 mnt.
Factors weighing on pellet imports
- Imports from India fall post export duty: Pellets exports from India remained poor, as Indian producers found it unviable to export due to the 45% tariff imposed in late May. Several sources previously corroborated that unless the duty is removed or reduced, there would be no outbound shipments, given that global iron ore prices have fallen sharply. The 45% export duty slapped in May impacted domestic prices as export demand shrunk.
- Preference for lumps in China: Demand for pellets also likely to face headwinds from declining coking coal prices in the international market, as producers preferred lumps over pellets when prices of coking coal had dropped.
- Decline in global iron ore prices: Iron ore prices globally slumped rapidly over the last few months on continued bearish market outlook.
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