China: Iron ore imports edge up in July as steel margins improve

China, world's largest iron ore consumer, recorded imports of iron ore (including pellets) at 91.24 million tonnes (mnt) in July 2022, up by 3% y-o-y as against 88.51 mnt seen in the corresponding period last year (CPLY), according to the General Administration of Customs.

On a monthly basis too, imports of the raw material inched up by over 2.5% m-o-m as compared to 88.97 mnt in June.

Despite demand concerns, import volumes saw a rise as steelmakers' profit margins improved, as a result of which, several Chinese mills restarted their blast furnaces which they had decided to idle due to Covid-19 lockdowns.

China's cumulative imports of iron ore were recorded at 626.82 mnt in January-July 2022, down 3% y-o-y.

Iron ore inventory continues to rise

Iron ore inventory at Chinese ports remained high at the beginning of August, according to SteelHome consultancy data. Inventory increased to a two-month high at 136.6 mnt on 4 August 2022 from 134.3 mnt recorded on 26 May 2022.

Outlook

Demand for iron ore is expected to continue remaining weak due to China's decarbonisation goals. China intends to reduce annual steel production for the second year in a row in order to curb emissions. The recovery in mill margins has raised hopes that production capacity will resume sooner than expected.