China: Iron ore imports rise 4% y-o-y in Oct'24 on supportive government policies

• Restocking and production activity continue
  
  
• Government stimulus boosting demand
  
  

China's iron ore and pellet imports touched 103.83 million tonnes (mnt) in October 2024, according to the General Administration of Customs. For the world's largest iron ore consumer and importer, October imports marked a 4% increase y-o-y from the 99.39 mnt registered in the corresponding period last year amid strong macroeconomic indicators and improved steel margins.

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

Factors affecting China's iron ore imports

• Government Stimulus and Liquidity Measures: China's central bank implemented various stimulus measures, including reserve requirement ratio (RRR) cuts and injections of long-term liquidity. These actions were designed to stabilize key industries like construction and property, which significantly increased demand for steel and, subsequently, iron ore. The optimism around government support for the real estate and infrastructure sectors helped boost iron ore imports as construction activity rose.
  
  
• Improved Mill Margins: Margins for steel mills slightly improved due to a combination of higher steel prices and cost-effective purchasing of iron ore. Mills sought to maximize profitability by securing medium and high-grade iron ore cargoes, pushing up demand. This trend continued despite price volatility, as mills balanced operational costs and production needs.
  
  
• Policy and Environmental Controls: While environmental restrictions were eased in regions like Tangshan, sintering restrictions were less severe than anticipated, allowing steel production to continue relatively uninterrupted. This continuity in production encouraged mills to sustain or increase their iron ore import levels to meet steady output targets, especially as production facilities anticipated no major cuts in the short term.
  
  
• Restocking Ahead of Peak Production: Steel mills increased iron ore purchases in anticipation of peak production periods in late Q4, preparing for steady output levels during the winter season. Additionally, low inventory levels for finished steel products in October prompted restocking of raw materials, including iron ore, which led to higher import volumes. However, iron ore inventory at Chinese ports increased in October, according to SteelHome data. Inventory rose to 147 mnt in October, 2024 compared to 105 mnt in the same period last year. Spot iron ore fines (Fe 62%) prices have dropped to $104/t CFR China in Oct'24 against $119/t CFR China in Oct'23.
  
  

Outlook: China's iron ore imports are expected to rise in the coming month, supported by ongoing government stimulus and strong demand from the construction sector. Steel mills are likely to continue restocking ahead of winter, maintaining high import volumes. Improved steel margins will further encourage imports, though any significant policy or price shifts could moderate growth.