China: Iron ore imports increase by 4% m-o-m in Nov'22 on restocking needs

China, the world's largest iron ore consumer, recorded imports of iron ore (including pellets) at 98.85 million tonnes (mnt) in November 2022. On a monthly basis, imports of the raw material moved up by 4% m-o-m, however, imports inched down by 5.85% y-o-y as against 105 mnt seen in the corresponding period last year, according to the General Administration of Customs.

Imports gained due to positive property market policies and improved seaborne movement. Iron ore prices were uplifted amid increased seaborne market spending as Chinese end-users start storing up for the Chinese Spring Festival, which starts in early 2023.

Highlights-

• Prices rose on restocking ahead of Chinese festival: Iron ore prices increased sharply by $20/t from the month starting to the end of November The Fe 62% fines price was $80.15/t in the first week of November and closed at $102/t, CFR China towards month end.
  
  
• Iron ore port inventory continues to rise: Iron ore inventory at Chinese ports inched up in November, according to SteelHome data. Inventory increased from 134.3 mn t in the beginning of Nov'22 to 138 mn t by the end Nov'22.
  
  
• Jan-Nov'22 imports fall - China's cumulative imports of iron ore were recorded at 1020 mnt in January-November 2022, down 2.1% y-o-y. Due to high energy prices and rising interest rates from central banks, there has been a decline in steel demand throughout the rest of the world as well as China.
  
  

Outlook

There is minimal potential for growth in the short to medium term for steel production and iron ore demand since the peak building season is coming to a close and the anticipated demand rebound is not reaching expectations.

Policy initiatives and shifts in industrial demand will continue to have an impact on ore pricing in the future. It is predicted that the iron ore contract will sustain a significant trend of volatility till May 2023 before high expectations are trumped.