China: Pellets imports rise over 25% m-o-m in Nov'22

China's pellets imports increased by 29% m-o-m to 1.67 million tonnes (mnt) in November as against 1.3 mnt in the previous month. Imports increased as most steelmakers preferred pellets over iron ore lumps amid the approaching winter. Kazakhstan was the largest exporter with 288,210 tonnes (t) in November followed by Canada and Australia with 273,765 t and 158,129 t respectively.

Factors pulling up pellet imports

• Environmental issues: The main reason for the rise in China's pellet imports in November lay in the fact that domestic plants used more pellets in place of iron fines following strict environmental diktats for winter.
  
  
• Covid-19 relaxation: In November, the Chinese government dropped its zero-Covid policy and eased some pandemic protocols. As a result, pellets demand increased, supported by steel market sentiments.
  
  

Imports drop y-o-y in November

China's imports of pellets and concentrates dropped 27.4% y-o-y to 15.25 mnt in January-November 2022 as against 21.01 mnt recorded in the corresponding period last year (CPLY), according to the General Administration of Customs.

Imports fell y-o-y due to sustained crude steel production cuts, slow bookings by traders in anticipation of weak demand from Chinese mills, and preference for low/medium grade ore due to shrinking steel margins.

India remained the largest exporter of pellets to China at 4.14 mnt in January-October. However, shipments from India fell by 39% as against 6.81 mnt in CPLY. There had been no supplies from India for the last four months (August-November) post-impact of export duty imposition. Recently, the Indian government removed the pellet export duty. So, there can soon be a boom in pellet exports to China from India.

Kazakhstan was the second largest supplier at 2 mnt followed by Australia at 1.52 mnt.

Outlook
Currently, the Chinese market looks uncertain and buyers are in a wait-and-watch mode. It is predicted that demand will revive in the next few days. This could result in an increase in pellets import volumes after the Chinese Lunar holidays.

Moreover, as India has removed the pellet export duty, shipments from the country to China may also revive.