China iron ore and pellet imports up 3% y-o-y during Jan-Feb'21

China- the world's largest iron ore consumer and importer recorded imports of iron ore (including pellets) at 181.5 mn t in Jan-Feb'21, according to the General Administration of Customs. The imports picked up as compared to 176.6 mn t in Jan-Feb'20 due to increased demand supported by firm consumption outlook.

Demand for iron ore rose on the back of steel margin recovery and a robust steel market outlook for 2021.

Monthly average iron ore prices fell in Feb'21 - The monthly average global iron ore fines (Fe 62%) index decreased to $164.5/t, CFR China in Feb'21 against $168/t, CFR China in Jan'21. Chinese Golden week holidays lowered buying inquiries with most of the steel makers/traders turning reluctant to conclude deals.

The iron ore prices have hit an over nine-year high on 4th March at INR 178.45/t, CNF China as interest for medium-grade fines remained strong amid supply tightness. The level was last witnessed towards Sep'11.

Outlook: The Tangshan government plans to close seven smaller blast furnaces in March and reduce emission by 40% in 2021 firmed up market expectations of a reduction in Chinese crude steel output for the whole year. In addition to it, China's resumption of ferrous scrap imports would be another factor that would drive the Chinese iron ore demand in CY'21.

The fundamentals of China's iron ore market are expected to improve this year from 2020, the China Iron & Steel Association (CISA) predicted in Feb'21 when summarizing China's steel industry performance for 2020, elaborating that the country's demand will ease probably on lower steel output, while supply may increase both from domestic and international miners because of capacity expansions and gradual recoveries in output from the adverse impact of the COVID-19.