What factors impacted China's bulk ferro alloy imports trend in 2021?

• Dual control policy, steel output curbs and rising energy prices impacted imports
  
  
• Ferro silicon imports rise 89% to 43.44 mnt in 2021
  
  
• Chrome ore imports up 4% to 14.95 mnt
  
  
• Ferro chrome imports drop 14% to 2.63 mnt
  
  
• Manganese ore imports down 5% to 30.3 mnt
  
  
• Ferro manganese imports slump 88% to 1.16 mnt
  
  
• Ferro alloys imports outlook for 2022 upbeat on expected rise in crude steel output
  
  

The year 2021 was a watershed for China. The country took several policy decisions which had a far-reaching impact on its steel industry. Its crude steel production, for the first time, dipped 3% y-o-y last calendar to 1.03 billion tonnes (bnt), matching the government's strict target of restricting the output to 2020 levels of 1.06 bnt or below.

The drop in crude steel production had an impact on some of the ferro alloy imports. Ferro alloys are additives which act as de-oxidants and alloying elements in steel-making. SteelMint goes behind the numbers.

Ferro silicon imports rise 89%

China's ferro silicon imports stood at 43.44 mnt in CY'21, rising 89% y-o-y compared to 22.96 mnt in CY'20.

North Korea was the top exporter at 37.09 mnt (up 141%) followed by Norway at 4.49 mint (down 13%) and South Africa at 0.31 mnt (21%).

The stringent restrictions of the dual control policy imposed in China were the main reasons behind lower domestic production of ferro silicon and higher imports of ferro silicon last year.

Domestic production remained impacted by power usage limitations, rising energy prices and crude steel production curbs.

Chrome ore imports up 4%
China's total chrome ore importsstood at 14.95 mnt in Jan-Dec'21, increasing by a moderate 4% compared to the previous year's 1.32 mnt, as per data collated by SteelMint.

Although South Africa continued to be the largest exporter of chrome ore to China, the volumes were just 2% higher compared to those in CY'20. China's total chrome ore imports from South Africa were at 12.01 mnt.

Increasing Covid-19 cases and the outbreak of the Omicron variant impacted chrome ore production in South Africa.

In addition, there were supply constraints due to civil unrest and logistical issues due to container nshortage and disruptions in Transnet's rail services which limited the country's overall exports.

Surprisingly, China's chrome ore imports from Turkey rose sharply by 66% to 1.04 mnt in
CY'21, thus, making it the second largest exporter. Turkey's volumes made up for the lower imports from South Africa.

Ferro chrome imports drop 14%

China's ferro chrome imports saw a noticeable drop of 14% y-o-y to 2.63 mnt as against 3.07 mnt seen in CY'20 as the country was largely focused on increasing domestic production amidst historically high prices of the material which made imports non-viable.

South Africa was the top exporter with 1.29 mnt but the volumes fell significantly by 22% y-o-y.

Other major exporters were Kazakhstan at 0.63 mnt, down 28% y-o-y and India at 0.31 mnt, down 8% y-o-y.

Manganese ore imports down 5%

China imported 30.3 mnt of manganese ore last year, a decrease of 5% compared to 31.67 mnt in the previous year.

South Africa, being the leading exporter, supplied 13.97 mnt, marginally up 2% y-o-y. Following this was Australia at 5.42 mnt, up 1% and Gabon at 4.25 mnt, down 10%.

Reduced production of manganese alloys amidst power curbs, coupled with a dip in its demand due to lower crude steel production, resulted in a drop in manganese ore imports.

Ferro manganese imports slump 88%

The country's ferro manganese imports saw a sizeable 88% fall to 1.16 mnt in CY'21 compared to 9.82 mnt recorded in the previous year.

The largest exporter was Vietnam with 443,000 t followed by Japan with 373,400 t and Malaysia with 322,000 t.

The fall in imports was mainly because of the production restrictions imposed by the government to reduce air pollution to get blue skies before the Winter Olympics.

The government also limited the power usage by industries to ensure production is lower.

Outlook

China is poised to increase its steel production now that the Lunar New Year holidays are over and so will the Winter Games shortly. It is also possibly looking at higher steel exports since the allocations have opened up from January. Higher crude steelmaking levels would mean increased requirement of ferro alloys which may push up imports of the material in the current calendar.