China: Pellet imports rise 27% y-o-y in Q1CY23

China's imports of pellet increased by 27.3% y-o-y to 7.11 mnt in January-March 2023 or first quarter of calendar year 2023 (Q1CY23) as against 5.59 mnt recorded in the corresponding period last year (CPLY), according to the General Administration of Customs.

India remained the largest exporter of pellets to China at 2.54 mnt followed by Iran and Kazakhstan with 1.38 mnt and 830,389 t, respectively in Q1CY23.

Factors pulling up pellet imports

• Rise in China's crude steel output: China's crude steel production for March increased by 6.9% y-o-y to 95.73 million tonnes (mnt), as per data from National Bureau of Statistics (NBS). Crude steel production increased by 6.1% on the year to 261.56 mnt during January-March, 2023.
  
  
• China's domestic iron ore production falls y-o-y in Mar'23: China, world's largest iron ore consumer, recorded run of mine (ROM) production at 86.4 mnt in March, 2023, down by 4.8% y-o-y, according to data from the National Bureau of Statistics (NBS). In Q1CY23, the country recorded ROM production at 243.26 mnt, almost stable compared to the same period last year.
  
  
• Increase in shipments from India post-export duty removal: Shipments fell from June, 2022 till November, 2022 primarily due to export tariffs of 50% on iron ore (all grades) and 45% on pellets imposed by the government in end-May last year. Tariffs were removed towards end of November, 2022 and shipments have increased steadily since then. Exports also soared since December on buoyant demand from China following reopening of the economy after lifting of Covid-19 restrictions.
  
  

China's pellet imports rise m-o-m in March

China's pellet imports increased by 10% m-o-m to 2.71 million tonnes (mnt) in March 2023 as against 2.47 mnt in February. Imports increased as most steelmakers were getting more margins in iron ore pellets. India was the largest exporter with 925,909 tonnes (t) in March followed by Iran and Kazakhstan with 648,661 t and 383,457 t, respectively.

Outlook

Currently, the Chinese market looks uncertain. Because, there is a price disparity between Indian and Chinese market players. In addition, falling steel margins has created more demand for low grade ore, which may lead to lower pellet imports in April, 2023.