China: Iron ore imports fall 5% y-o-y in Aug'24 on lower hot metal output, high port inventories

China's iron ore and pellet imports touched 101.39 million tonnes (mnt) in August 2024, according to the General Administration of Customs. For the world's largest iron ore consumer and importer, August's imports marked a 5% decrease y-o-y from the 106.41 mnt registered in the corresponding period last year, driven by reduced hot metal production and higher portside stocks. On an m-o-m basis, the import volume for August 2024 remained largely stable as compared to July 2024.

However, China's iron ore imports rose by 5% y-o-y in January-August, 2024 as compared to the same period last year.

Factors affecting China's iron ore imports

• Crude steel output falls y-o-y: China's crude steel output was recorded at 613.7 mnt in January-August 2024, down slightly by 2% y-o-y.
  
  
• Hot metal output slides m-o-m: Daily hot metal production among the 247 Chinese blast furnace (BF) steelmakers sampled in Mysteel's regular survey averaged 2.26 mnt during 1-29 August, down by 5.3% compared with the daily average of 2.39 mnt in July.
  
  
• Iron ore prices edge down y-o-y: Benchmark Fe 62% Australian fines prices dipped by 2% y-o-y to $113.87/tonne (t) CFR China in January-August 2024 from $116.37/t in January-August 2023 amid persistently weak downstream steel demand, which continues to exert pressure on raw material prices. As steel mills face significant financial challenges, with many operating at a loss, there is reduced appetite for purchasing iron ore, particularly as mills remain cautious about restocking amid expectations of further output reductions.
  
  
• Iron ore port inventory rises y-o-y: Iron ore inventory at Chinese ports rose y-o-y to 150 mnt (monthly average) in August 2024 compared to 118 mnt (monthly average) in August 2023, according to SteelHome data.
  
  

Outlook

It is anticipated that China's iron ore imports are likely to remain relatively steady, supported by ongoing economic optimism and stable market conditions. However, China's iron ore prices are approaching $90/t CFR China mark. Despite a slight decline in crude steel output and marginally lower global iron ore prices, the anticipation of supportive economic policies from China and potential liquidity boosts from the US Federal Reserve are likely to sustain import levels.