China, the world’s largest iron ore consumer, recorded iron ore imports (including pellets) at 88.51 million tonnes (mn t) in Jul’21 against 89.42 mn t in Jun’21, according to the General Administration of Customs data. The imports dropped by 1% m-o-m to over one-year low, as per data maintained with SteelMint. The drop in imports was due to sustained crude steel production cuts, dampening demand for iron ore. On a yearly basis, imports witnessed a decline of 21% vis-a-vis 112.65 mn t in Jul’20.
During Jan-Jul’21, China imported 649 mn t iron ore, lower by 1.5% compared to the CPLY.
The demand in the first half was affected by weather-related supply issues by top exporters Australia and Brazil, and growing concerns over the Covid-19 outbreak. Meanwhile, robust steel production and higher profits at mills supported the elevated demand.
Monthly average iron ore prices remain stable in Jul’21: The average global iron ore fines (Fe 62%) index was recorded at $214/tonne (t), CNF China, stable on a m-o-m basis.
Outlook
China aims to control its annual crude steel output to meet its goal of carbon emissions cuts. Hence, trade analysts expect iron ore demand to soften in the near future. For instance, in July, China’s Shandong province issued a notice clearly requiring that this year’s crude steel output should not exceed 76.5 million tons (mn t), which is based on the output of iron and steel enterprises in 2020, as per media reports.
The spot price of iron ore Fe 62% fines dropped sharply by $14.5/t on 30 Jul’21 to $180.5/t CFR China tracking the decline in the iron ore futures market.
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