China imported record iron ore in September as steel output curbs start to bite
The amount of iron ore imported by China surpassed 100 million tonnes for the first time in September.
According to Hellenic Shipping News, imports from Australia and South Africa hit records – 65.1MT and 5.09MT respectively – while imports from Brazil reached the third highest level at 21.7MT.
Australia is China's largest iron ore importer followed by Brazil and South Africa. The three combined for 91.98MT in September, close to 13MT higher than August, reads a table of Chinese customs data, below. In total Chinese imports of Fe were 102.8MT, which is a 16% increase from August. The last record of 98.3MT was set in December 2015, reports Hellenic Shipping News.
Earlier this month Chinese iron ore futures jumped more than 5%, due to a rally in steel prices, as China's steel mills ramp up production in expectation of a major output cut. Chinese steel output in September rose 5.3% from the year before to 71.8m tonnes; not far off the record 73.2m tonnes produced in August.
But mills in northern Chinese cities including top steel-producing Tangshan have been ordered to slash production due to a government mandate to fight pollution caused by industrial plants. As much as 30 million tonnes could be reduced between October and March.
According to London-based consultants CRU, China is on track to cut 240m tonnes of annual capacity by 2020 from its peak in 2015,
The reality of the cuts (mills have begun reducing rates) are beginning to be reflected in the iron ore price. On Friday the spot price fell for the third straight session, in parallel with reductions in the price of Chinese futures. Via Business Insider Australia, Metal Bulletin reports the steelmaking ingredient (benchmark 62% fines) slid to a new two-week low of $60.08 a tonne Friday, extending its price decline from mid-August to 25%.