China wants more high grade iron ore - Russell
Reuters reported that there may be a slight problem with the prevailing theme for the iron ore market this year, namely that China is increasingly interested in using higher-grade ore as part of efforts to boost output and lower per unit pollution.
While Chinese steel mills may well be seeking to boost the use of high-grade iron ore fines and pellets, this isn’t exactly showing up in the import numbers.
The overall figure for Chinese iron ore imports is one of stability, with customs data released on June 8 showing 447.5 million tonnes arriving in the first five months of the year, up a scant 0.7 % from the same period last year.
The breakdown of the data is somewhat trickier, given that the Chinese government hasn’t released the detailed country-by-country numbers for April, and hasn’t provided a reason for withholding the numbers.
However, vessel-tracking and port data compiled by Thomson Reuters Supply Chain and Commodity Forecasts, which has a strong correlation with the official numbers, indicates that China is still taking large quantities of medium- and low-grade iron ore.
In the first five months of the year 289.3 million tonnes of Australian iron ore arrived at Chinese ports, according to the data.
The vast majority of Australian ore is 62 % iron content, such as that mined by top producer Rio Tinto, or the lower 58 %, as produced by the country’s third-ranked miner Fortescue Metals Group.
Very little of Australia’s output is the high-grade 65 % iron ore fines, or high-grade pellets.
But Australia appears to have increased its share of China’s seaborne iron ore imports so far this year, with the vessel-tracking data showing a 4.9 % gain from the first five months of 2017.
Brazil, which is the main supplier of higher-grade iron ore, hasn’t been able to increase its share of China’s seaborne iron ore market, according to the shipping data.
China imported 83.1 million tonnes from Brazil in the first five months of the year, down fractionally from the 83.5 million for the same period in 2017.
The Brazilian situation is somewhat complicated by the distribution centre run in Malaysia by Vale, but the shipping data doesn’t show any major spike from the Southeast Asian nation, with China’s imports rising 800,000 tonnes to 8.9 million in the January to May period.
One high-grade iron ore producer that has seen a significant increase of its shipments to China, at least in pct terms, is Peru. China’s imports in the first five months jumped 19.4 %.
However, this is off a small base and China’s imports from the South American producer totalled only 8 million tonnes in the first five months of 2018.
Another producer of high-grade iron ore is South Africa, which is the third-biggest supplier to China.
However, China’s imports from South Africa were largely steady in the first five months of the year at 15.4 million tonnes, down from 15.7 million in the same period last year.
Source : Reuters