China: Pellets imports fall over 25% y-o-y in CY’22

China’s pellets imports decreased 28% y-o-y to 16.17 million tonnes (mnt) in the calendar year 2022 (CY22) as against 22.52 mnt in CY21.

India largest exporter, however, volumes fall

India was the largest pellet exporter to China. Pellet exports were recorded at 4.2 mnt in CY22, falling by 40% y-o-y against 6.9 mnt in CY21. The sharp declined in pellet exports was due to the 45% export duty imposed by the Indian government in May 2022.

Kazakhstan and Iran were the second and third-largest iron ore exporters to China in CY22. The latter imported 2.24 mnt from Kazakhstan, up 17% y-o-y while 2.27 mnt was imported from Australia, down 16% y-o-y.

Factors oulling down pellet imports

• Covid-19 cases: In CY22, China suffered from a surge in Covid-19 cases. The Chinese government imposed lockdowns for several days in several big cities.
• Russia-Ukraine war: Ukraine exported 0.60 mnt of pellets to China in CY22, which declined 85% y-o-y compared to 3.87 mnt in CY21. The logistics problems, due to the Russia-Ukraine war, was the main reason for the decrease in volumes.
• India imposes pellet export duty: There had been no supplies from India for four months (August-November) post-impact of the export duty imposition. Due to this, exports from India to China came down sharply.

Imports drop m-o-m in Dec

China’s imports of pellets and concentrates dropped 45% m-o-m to 0.91 mnt in December 2022 as against 1.67 mnt recorded in November.

Imports fell m-o-m 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.

Kazakhstan remained the largest exporter of pellets to China at 233,976 tonnes in December. Australia was the second largest supplier at 184,522 t, followed by the UAE with 133,913 t. However, shipments from India were at 52,896 t in December. There had been no supplies from India for the four months (August-November) post-impact of the export duty imposition. However, with the removal of the duty in November, pellet exports from India have picked up.

Outlook

Currently, the Chinese market looks volatile. It will totally depend on the Chinese government’s policies for the next two-three months. Moreover, as India has removed the pellet export duty, shipments from the country to China may also revive.