Persistent weakness in steel demand forced Chinese mills to cut back iron ore import.
In Aug’15, China’s iron ore import is recorded at around 74.12 MnT against 86.1 MnT in July’15. Imports dropped by 14% M-o-M. Import in first eight months of 2015 is recorded at 613 MnT, dropped by 0.2% Y-o-Y.
Contraction in imports by world’s top consumer is a clear indication that demand of raw materials in China shrunk last month.
Low cost output, by major iron ore producers world wide, over flooded market causing spot iron ore prices to move down. Iron ore prices in July’15 plunged to new 10-year low at USD 44.1/MT, as over supply by major iron ore producers like Rio Tinto, Vale swamped the market.
In addition, massive explosion at Tianjin Port in mid Aug’15, halted iron ore supply, causing delayed import shipments which may also have reduced iron ore import figures.
Devaluated Yuan, too, made iron ore imports much costlier for China. The country majorly imports from Australian miners.
Steel Exports Gaining Momentum
China’s week demand and higher global prices have somewhat boosted steel exports. Steel export from China gained by almost 26% to 71.8 MnT in the period between January-August. Steel exports are gaining momentum as mills in China are still prefering to make more steel prior to economy needs due to ample availability of cheap ore.
Currently, Chinese mills are expected to resume production as China held a parade for the 70th anniversary of the end of World War 2. However, steel mills have increased buying of iron ore to ramp up production, which may further lift spot prices.
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