Iron ore imports by China, the largest buyer, fell for a third month as steel prices slide amid weakening demand from automakers and builders. Exports of steel products gained to the highest level since September 2008.
Imports dropped 9 percent to 47.2 million metric tons in June from 51.9 million tons in May, according to data provided by the General Administration of Customs today. Imports fell 15 percent from 55.3 million tons a year earlier.
Chinese steel prices have fallen 17 percent from an 18- month high on April 15 following government moves to curb property speculation. Jiangsu Shagang Group Co. and Nanjing Iron & Steel Co. have put off iron ore purchases after prices dropped, choosing to run down inventories.
“The third quarter doesn’t look good for the steel and iron ore market,” said Helen Lau, a Hong Kong-based analyst with UOB-Kay Hian Ltd. “Steel producers and traders are reluctant to place orders for ore.”
Chinese steelmakers are likely to cut output this quarter because of weak demand from auto and appliance makers, Xu Lejiang, chairman of Baosteel Group Corp., the country’s second-biggest mill, said on June 8. Steelmakers may default on quarterly iron ore contracts, he said, while saying his company would respect the agreements.
Steel-product exports climbed 13.8 percent from May to 5.62 million tons, the highest level since September 2008, according to Bloomberg data. Shipments in the first six months more than doubled on the year to 23.6 million tons, it said.
“We don’t believe that exports at current levels are at all sustainable for more than another month or two,” said Michelle Applebaum, an independent steel analyst in Chicago. “As raw material costs continue to spiral skyward, the cash costs of running a steel mill in China have escalated to the point that for the Chinese to be dumping high-cost steel into other markets is like turning ‘gold into straw.’”
China’s average import price for iron ore in the first half increased 47 percent to $111.5 per metric ton, the customs agency said today. China’s iron ore imports rose 4.1 percent from a year earlier to 309.3 million tons in the first half of this year, customs said.
To contact the Bloomberg News staff on this story: Helen Yuan in Shanghai at firstname.lastname@example.org