Customs data and China’s iron ore imports
China is the largest consumer of the seaborne-traded iron ore. It consumes ~70% of the total traded product. Because most of the iron ore produced in the rest of the world goes to China, it is important for investors to track this data.
China’s iron ore imports again remained very strong in November 2017, as was the case with the most of the rest of the year. China imported 94.5 million tons of iron ore in November, which is the fifth highest on record.
The imports were also 18.9% higher month-over-month and 2.8% higher year-over-year (or YoY). The data for the first 11 months of the year show a rise of 6.0% in imports YoY to 991.0 million tons. China should surpass 2016’s import record of ~1.0 billion tons in 2017.
Strong iron ore import demand
The capacity cuts ordered in China are leading to higher steel prices. The steel mills have probably restocked in anticipation of higher demand as capacity cuts end in March. Most market participants are of the view that pent-up demand should emerge after March, which should be conducive to iron ore prices.
Even now, the miners (XME) producing high-grade ore such as BHP (BHP), Rio Tinto (RIO), and Vale (VALE) are being paid premium over the other miners. Miners such as Cleveland-Cliffs (CLF) and Fortescue Metals Group (FSUGY), could keep attracting discounts.