According to a new report issued by the China Iron and Steel Association (CISA), as of January 31 this year imported iron ore inventory at Chinese ports totaled 140 million mt, down 1.29 percent month on month, while remaining at relatively high levels, with the oversupply situation in China’s iron ore market not indicating any significant changes.
In 2018, China imported 1.064 billion mt of iron ore, down 10.22 million mt compared to the previous year. In the same year, China imported 205 million mt of iron ore from Brazil, down around 13.0 million mt year on year. The Brazil dam collapse will likely affect 40-60 million mt of Vale’s iron ore output, which only accounts for around five percent of China’s overall import iron ore volume. Accordingly, the CISA suggested that players in China’s ferrous metals market should not exaggerate the impact of the dam collapse.
According to the CISA, as of February 1, the composite steel price index (CSPI) in China had declined by 0.35 points or 0.33 percent to 106.77 points compared to December 31.
In the January 1-20 period this year, the average aggregate daily crude steel output of large and medium-sized steel enterprises in China - all CISA members - totaled 1.8166 million mt, with the average aggregate daily crude steel output for all steelmakers in China in this period amounting to 2.3948 million mt, down 2.47 percent compared to December. In addition, the average aggregate daily pig iron output in China in the given period amounted to 1.9938 million mt, down 2.2 percent compared to December, resulting in slacker demand for import iron ore.
In its report, the CISA stated that in 2019 China’s steel industry will continue to implement supply-side reforms, which will likely exert a negative impact on crude steel output. Meanwhile, with the increasing usage of scrap, the demand for import iron ore will slacken to some extent. At the same time, since it is currently the traditional offseason for finished steel consumption, domestic finished steel prices will move on a fluctuating trend, which will influence import iron ore prices. It is believed that import iron ore prices for China will unlikely continue their sharp uptrend, but will fluctuate within a limited range, the CISA said.