The iron/steel trade has always been predicated on Chinese demand. Late Thursday, China reported record imports of 102 million metric tonnes in September — eclipsing an old record set in 2015. Last year September, China recorded imports of 93 million.
Year to date, imports are up 7.1% to 817 million tonnes, partly thanks to China’s shuddering local mines in an effort to improve their air quality.
Some remain pessimistically inclined.
Source: Bloomberg
“High-grade ore is certainly gaining popularity,” Dang Man, an analyst at brokerage Maike Futures Co., said via text message. “Seasonally, September is a strong month for imports as mills tend to stock up before winter. We think purchases will drop significantly in October as steelmakers cut output.”
During the month of September, Chinese steel exports dropped by 5.1% — the lowest since 2014, in addition to a 370,000 tonne in aluminum cargoes.
It’s important to note that iron ore spot prices have been mired in a miserable slump all year long. But on Friday, iron/steel stocks came to life, with more than a handful of stocks higher by more than 5%.
“Chinese iron ore production has collapsed through the summer,” Macquarie said in a report on Oct. 10, citing a government-led clampdown on small, private and high-cost mines. Separately, the China Metallurgical Mines’ Association said in September the crackdown on small, polluting mines may gradually force the cancellation of more than 1,000 licences.
Thanks to China’s concern for their environment, foreign ore exporters are benefitting, especially those who mine high quality ore. If this trend continues, further share price gains in the sector is a foregone conclusion.
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The Chineez are not exactly known for accurate reporting and are quite liberal with their statistics. I mean, for the commie chineez, if the value of number 2 is large enough, they will round it up to 3.
‘Thanks to China’s concern for their environment…’
HA ha ha ha ha ha. Hilarious!