China increased iron ore imports by 7% y/y in January-May

The increase in raw material imports contrasts with the weakness of steel production

In January-May 2024, China increased its iron ore imports by 7% y/y – to 513.75 million tons, SteelOrbis reports.

In particular, in May, it increased by 6.1% y/y – to 102 million tons. Compared to April, these volumes increased by 0.2%.

The growth in China’s iron ore imports this year is in stark contrast to the weakness of steel production and demand for steel products, says columnist Clyde Russell in his column for Reuters. Imports of these raw materials have exceeded 100 million tons for the third month in a row.

At the same time, in January-April, Chinese steelmakers produced 343.67 million tons of steel, down 3% from the same period last year. Although official data for May have not yet been released, the findings of the China Steel Industry Association, which represents the country’s largest steel mills, suggest that steel production is unlikely to have recovered significantly last month.

Steel mills are also suffering from low profitability, and their sentiment has not yet improved despite Beijing’s ongoing efforts to stimulate the housing sector. However, demand for steel and expectations in the industry may increase in the second half of the year.

Growing imports of iron ore have not been used for steel production, but rather to rebuild inventories. Their growth in ports over the past seven months has averaged 6.06 million tons per month. There is also a strong correlation between iron ore prices and China’s imports.

As GMK Center reported earlier, global iron ore exports in January-March 2024 increased by 6% compared to the same period in 2023 – to 376 million tons. The top five exporters accounted for 332 million tons of exports, up from 318 million tons a year ago.