China Buys More Iron From Abroad as Steel Exports at Recordby
Iron ore imports climb to highest this year before holiday
Steel shipments jump as producers seek out overseas markets
Iron ore imports by China increased to the highest level this year in September to near a record as purchases picked up before a holiday and the biggest miners in Australia and Brazil boosted shipments. Steel exports from the top producer hit an all-time high.
Inbound iron ore cargoes were 86.12 million tons in September, the highest since December, from 74.1 million tons a month earlier and 84.7 million tons in September 2014, according to customs figures on Tuesday. Purchases totaled 699 million tons in the first nine months, little changed from a year earlier, the data showed. The record for imports was set in December at 86.85 million tons.
Total imports by Asia’s largest economy posted an 11th straight drop last month, in part on slumping commodity prices including iron ore. The lower prices have spurred the closure of high-cost mines in China, forcing mills to boost their reliance on iron ore shipments from overseas. At the same time, Chinese mills have stepped up a drive to sell more of their output abroad to make up for shrinking sales at home as growth slows.
“There was a little bit more activity before the ports shut down for a week or more in October,” said Ralph Leszczynski, head of research in Singapore at Banchero Costa & Co., a Genoa-based shipbroker, referring to China’s week-long Oct. 1-7 shutdown. “Both in Australia and Brazil, producers have really ramped up their export capacities.”
The restocking last month means October imports will probably be weaker, Australia & New Zealand Banking Group Ltd. said in a note. Ore with 62 percent content delivered to Qingdao fell 2.9 percent to $54.97 a dry ton on Tuesday, according to Metal Bulletin Ltd. It’s 23 percent lower this year as Rio Tinto Group, BHP Billiton Ltd. and Vale SA boosted low-cost supplies amid forecasts for the slowest Chinese growth in more than two decades.
Steel shipments from China climbed to a record 11.25 million tons in September, 16 percent higher than August, the data showed. Since the start of the year, exports expanded 27 percent to 83.1 million tons compared with the same period in 2014.
“The steel industry in China is way oversupplied because they built steel-mill capacity like crazy,” Leszczynski said. “They don’t know what to do with the steel. They’re lucky to find enough demand for this steel.”
China’s demand for the metal will probably contract 3.5 percent this year and another 2 percent in 2016 after consumption peaked in 2013, the World Steel Association said Monday in a statement. There’s an increasing risk from the economic slowdown and financial market volatility, which has become a global concern, the association said.
The flood of cheap steel exports from China that’s hurt prices and damaged mills’ profits around the world will probably top out this year as producers step up complaints, according to Roberto Cola, chairman of the South East Asia Iron & Steel Institute. Efforts within China to stem local steel output to protect the environment may also help curb overseas sales, he said in an interview on Tuesday.