Iron Ore Imports by China Shrinking Amid Property Slowdown

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Iron ore imports by China dropped in April compared with the same month a year earlier, adding to signs that demand in the world’s largest user may be slowing as the property market cools, hurting local steel consumption.

Imports totaled 80.2 million metric tons in April, in line with 80.5 million tons in March, and 3.8 percent lower than a year earlier, according to customs data on Friday. Purchases from overseas in the first four months were 307.3 million tons compared with 305 million tons in the same period in 2014.

The prospect of peak iron ore demand is near after growth in China’s steel consumption stalled last year, Goldman Sachs Group Inc. said this week, and Australia & New Zealand Banking Group Ltd. cut price forecasts. While iron ore rose last month after BHP Billiton Ltd. deferred port works in Australia and Vale SA said it may cut some higher-cost output, prices remain 68 percent lower than a record in 2011 amid a glut. China’s steel exports rose last month, separate figures showed Friday.

Iron ore “fundamentals are still bruised by expanded low-cost supply and flat demand,” Mark Pervan, head of commodity research at ANZ in Melbourne, wrote in a report on Friday received before China’s trade data for April was released. “Our price downgrades are for 2016 and 2017 on a prolonged period of weakness in China’s steel market.”

Ore with 62 percent content at Qingdao, which bottomed at $47.08 on April 2, rose 1.7 percent to $61.40 a dry ton on Friday, data from Metal Bulletin Ltd. showed. Prices climbed 9.3 percent this week, narrowing this year’s drop to 14 percent.

Port Hedland

Exports of iron ore to China from Australia’s Port Hedland declined last month from March to the lowest level since November, according to figures on Monday. Shipments to China totaled 30.1 million tons in April, compared with 31.2 million tons in March and 28.9 million tons a year earlier, according to data from the Pilbara Ports Authority.

Steel consumption in China will shrink 4 percent this year and a further 2 percent in 2016, ANZ said. Iron ore will average $55 a ton next year, down from an earlier forecast of $60, and $60 in 2017, down from $63, the bank estimated.

Asia’s largest economy grew in the first quarter at the slowest pace since 2009 amid the property market slowdown. The world’s biggest maker of steel buys iron ore from overseas to supplement local supplies.

The customs data on Friday also showed rising steel-product exports from China. The shipments increased to 8.54 million tons in April from 7.7 million tons in March and 7.54 million tons a year earlier.

Domestic steel consumption dropped 6.2 percent to 177 million tons in the first quarter, the China Iron & Steel Association said on April 29. Steel demand in the country will drop this year and next to extend the first annual contraction since 1995, according to the World Steel Association.

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