China iron ore imports
Chinese customs data tracks the country’s iron ore imports. Tracking the data is important for investors. It gives a good sense of the appetite for imported ore among Chinese mills and traders. Chinese mills and traders consume about two-thirds of seaborne iron ore.
The iShares MSCI Global Metals & Mining Producers ETF (PICK) invests in iron ore. So, the data affects it equally. BHP Billiton is PICK’s top holding. It forms 18.5% of the ETF. The SPDR S&P Metals & Mining ETF (XME) also invests in some of these stocks.
For February, Chinese iron ore imports came in at 67.9 million tons—compared to January’s 78.6 million tons and December’s 86.9 million tons. This is a decline of 13.6% month-over-month. However, YoY (year-over-year) imports increased by 10.9%. This is the second straight month of decline for China’s iron ore imports. The major reason for the decline is weak steel demand. It’s mainly tied to the Chinese construction sector.
China’s government cracked down on polluting steel mills. This is also one of the factors that’s leading to muted growth in the sector.
Glut situation continues
While there’s still an oversupply of iron ore in the system, sustained closures by high-cost mines in China and elsewhere can help revive the situation and save the day for miners.