China’s iron ore imports hit four-month low in October ahead of winter curbs

13th Nov 2018

China’s imports of steelmaking ingredient iron ore fell to a four-month low in October, customs data showed on Thursday, reflecting slower shipments from major suppliers even as Chinese demand remained strong ahead of winter production curbs.

China brought in 88.4 million tons of iron ore last month, data from the General Administration of Customs showed, the lowest since June and 5.4 percent below September’s 93.47 million tons.

Still, the October imports were up from 79.47 million tons in the same month last year.

“Chinese demand remained strong as you can see from the capacity utilization at steel mills which remained very high,” said Richard Lu, analyst at CRU consultancy in Beijing.

“So the drop in imports is really due to reduced shipments from major suppliers,” said Lu, citing slower flow of cargoes from top iron ore supplier Australia in early October.

“Another reason may be the yuan depreciation,” the analyst said. “A lot of iron ore buyers shifted to port stocks from seaborne because it’s much cheaper for them to buy in yuan than in U.S. dollars.”

Data from the China Iron and Steel Association showed that average daily crude steel production at its member mills stood at 1.97 million tons over Oct. 1-20, nearly matching September’s 1.98 million tons.

Underlining firm demand for iron ore in China, stocks of the raw material at China’s major ports stood at 141.65 million tons on Nov. 2, nearly 13 percent below a record high in early June, data tracked by SteelHome consultancy showed.

As part of the government’s battle against pollution, factories across northern China will crimp output during the winter heating season that lasts from mid-November until mid-March, with steel producers at the heart of cuts.

But this winter’s curbs are expected to be more lenient than last year after China ditched blanket restrictions, instead allowing cities and provinces to set their own output cuts.

The environment ministry last week said China would not relent in its efforts against pollution even as the economy slows.

Vessel-tracking and port data compiled by Refinitiv suggests China will only import about 61.55 million tons of seaborne iron ore in November.

For the first 10 months of 2018, China’s iron ore imports reached 891.69 million tons, down slightly from 896.10 million tons in the same period a year earlier.

Source: REUTERS