uploads///China iron ore imports

Why China’s Iron Ore Demand Could Soon Weaken

By

Jan. 28 2019, Updated 5:25 p.m. ET

Customs data and China’s iron ore imports

As China consumes more than 70% of seaborne-traded iron ore, it’s imperative for iron ore investors to track the country’s demand and outlook. According to Reuters, China’s iron ore imports fell for the first time since 2010 last year, by 1% YoY (year-over-year) to 1.064 billion tons. In December, China’s iron ore imports rose 2.8% YoY to 86.65 million tons but were almost flat month-over-month.

Article continues below advertisement

Outlook remains dull

Eventually, iron ore demand had to catch up to China’s weakening fundamentals. As we’ll discuss later in the series, Chinese steel mills are facing narrowing margins, which is curbing their restocking demand. Moreover, due to their narrower margins, Chinese mills have now switched to lower-grade ore. Major miners (XME) BHP (BHP), Rio Tinto (RIO), and Vale (VALE) produce high-grade materials, and their premium is falling. However, Vale believes that higher-grade material’s premium is here to stay.

Most market participants agree that China’s iron ore imports could grow slowly in the years ahead, mainly due to the country’s high base and steel overcapacity. US-China (QQQ) (VTI) (MCHI) trade issues are also expected to affect the Chinese economy, impacting all sectors.

Advertisement

More From Market Realist

  • DermTech sign
    Healthcare
    DermTech (DMTK) Targets Massive Market, Investors See a Bargain
  • COVID-19 vaccine and Vaxart logo
    Healthcare
    Hate Injections? Vaxart Stock Might Be Attractive After the Crash
  • COVID-19 virus and Cocrystal Pharma logo
    Healthcare
    Cocrystal Pharma Stock Is a Speculative Play on COVID-19 Drug
  • Stethoscope and a smartphone
    Healthcare
    Why Bionovate Technologies (BIIO) Stock Is a Risky Bet in 2021
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.