Iron ore imports continue to decline in April

The data shows that at present, China's steel and ore market demand is in a weak state, and industry analysts are pessimistic about the follow-up market.

According to the data released by the General Administration of Customs yesterday, China imported 52.88 million tons of iron ore in April, a year-on-year decrease of 4.5% and a year-on-year decrease of 11.1%. This was a further decline after the recovery of ore imports in March.

Analyst Hu Kai from Analysys of Union Metals believes that after entering April, most of the steel mills began to implement the long-term price in the second quarter, which is 25% higher than the price in the first quarter of March, so the import of steel mills has been relatively reduced.

The data of the General Administration of Customs also showed that the average price of iron ore imports in China in April was US$160.45/ton, which was basically the same as the previous month and continued to be at historically high levels. From January to April, the average import price of iron ore in China was US$157.6/ton, up 53.9% year-on-year.

For the future import market, Qiu Yuecheng, an analyst at the Nisshin Shinkansen Project, expects that as domestic crude steel production continues to remain high and demand for iron ore is strong, with the ingestment of inventories, iron ore imports will likely be in May and June. There has been a pick-up, but the purchase of steel mills tends to be conservative as the downstream steel market is not expected. “The steel mills do not want to store too much inventory in the absence of an unknown external situation, so it is expected that ore imports in the future may not exceed January and March.”

Liu Zhiyuan, a senior researcher in steel financial investment, also believes that due to the impact of domestic power restrictions and the strengthening of the US dollar to curb the price of imported ore, the current high ore price may also be adjusted in the later period.

It is worth noting that the upcoming summer off-season will also weaken the downstream demand of steel mills. Future price policies formulated by steel mills have already reflected this trend.

Yesterday, Baosteel took the lead in publishing the steel price policy in June. Most of the products remained unchanged, but some products were reduced by RMB 100-600/ton. For example, in the pickling products, the directly-affiliated plant products are generally reduced by RMB 100/ton; in the non-oriented electrical steel products, the B50AR350, B50AH600 and below are highly efficient, and the B50A470 and B50A540 are lowered by RMB 200/ton.

Analyst Hu Yanping of Union Metals pointed out that some of Baosteel's price reductions for steel products in June were not optimistic about the market outlook. On the other hand, major downstream industries such as automobiles and household appliances must enter the off-season.

For the construction steel market, Qiu Yuecheng believes that the current inventory on the domestic market is low, and that power cuts will be favorable to supply, and it is expected that the space for downward adjustment of construction steel prices will not be too large.

While the demand in the domestic market is weak, the international market is also not ideal. According to data from the General Administration of Customs, China exported 4.77 million tons of steel in April, an increase of 470,000 tons year-on-year and a decrease of 140,000 tons.

In this regard, Liu Zhiyuan pointed out that the recent fall in international prices is very obvious, the domestic steel prices are higher than the foreign steel prices, the export power of steel mills is inhibited, and a slight decline in the export chain in April is also expected, in May and June. The decline in exports may be even more pronounced.

Qiu Yuecheng also believes that the recent international steel market performance is sluggish, the domestic and international spreads have narrowed significantly, and the situation of export orders for steel mills has declined in May. It is expected that domestic steel exports will continue to fall in May and June.