Growth in heavy industrial capacity and mining investment in China continued to slow in the first quarter of this year, according to the China Resources Quarterly (CRQ) report released by Australia's Department of Industry and Science. Housing sales and starts opened the year weaker than they finished in 2014 and dwelling prices remain under pressure across most of China, while one bright spot in the economy is investment in transport infrastructure which continues to display strong growth.
In the first three months of this year, China's steel production declined 0.5 percent to 200 million mt compared to the same period of 2014. Despite this, China's iron ore imports increased 2.3 percent to 227 million mt on year-on-year basis. The report said that Australia's share of these imports continued to increase, growing from 54 percent in the first quarter of the previous year to 64 percent in the first quarter of this year.
Meanwhile, during the January-March period this year, Australia's exports of iron ore to China increased 18 percent year on year to 144 million mt. Tepid demand from China combined with plentiful supply led to the average price of 62 percent iron ore decreasing 48 percent year on year and 16 percent on quarter-on-quarter basis in the first three months of this year. Most commodity prices continued to decline in the first quarter of this year, largely driven by continued increases in supply although growth in demand has generally been weak. However, there are indications that prices for commodities such as iron ore and oil may be stabilizing, albeit at lower levels than recorded through 2014, the CRQ report said.