China’s imports of iron ore are on track for another robust month in October, following on from September’s record arrivals, with the strength standing in stark contrast to weak steel output.
October imports are forecast to reach 113.06 million metric tons by commodity analysts Kpler, a figure that if matched by official data would be second only to the all-time high of 116.33 million in September.
China imports about 75% of global seaborne iron ore and uses the raw material to produce around half of the world’s steel.
Iron ore imports have picked up pace in recent months after a weak start to the year, with the last four months all seeing official arrivals exceeding 100 million tons.
This has taken the year-to-date figure to almost the same as last year, with imports for the first nine months coming in at 917.69 million tons, down 0.1% from the same period in 2024.
A strong October will push the year-to-date figure into positive territory, even though steel production is struggling.
China’s steel output slipped to a 21-month low in September, with official data showing production of 73.49 million tons, down 4.6% from the same month in 2024 and also a drop of 5% from August’s 77.37 million.
For the first nine months of the year China produced 746.25 million tons, down 2.9% from the same period in 2024.
That pace puts China on track for total steel output of close to 1 billion tons in 2025, consistent with the production levels of the past five years and meeting an unofficial government target that output should not exceed that of the previous year.
SENTIMENT BOOST?
The question for the market is why has China picked up the pace of iron ore imports in recent months even as steel output softens?
Price moves offer a partial explanation, with benchmark Singapore Exchange contracts (SZZFc1) dropping to an eight-month low of $93.35 a ton on July 1.
The lower price would have encouraged steel mills and traders to increase imports, but this momentum may be fading given the price has trended higher in recent weeks, ending at $105.66 a ton on Monday, not far off the eight-month high of $107.30 reached on October 13.
There is also some evidence of rising stockpiles, with port inventories monitored by consultants SteelHome (SH-TOT-IRONINV) reaching 133.6 million tons in the week to October 24, having risen since the 18-month low of 130.1 million in the seven days to August 8.
Domestic iron ore production has also been modestly lower, dropping 3.8% to 761.43 million tons in the first nine months of the year.
However, the modest gain in inventories and the small drop in domestic output aren’t enough to justify the recent strength in imports.
It’s likely that sentiment is playing a bigger role with optimism growing that China’s economy is weathering the trade storms unleashed by U.S. President Donald Trump.
The prospects of some form of truce between Washington and Beijing on the trade front are likely to boost support for iron ore and steel bulls.
Officials from the world’s two largest economies are reported to have worked out a framework deal for Trump and his Chinese counterpart Xi Jinping to consider later this week, with the two leaders due to meet on Thursday on the sidelines of the Asia-Pacific Economic Cooperation summit in Gyeongju, South Korea.
While there are concerns that any deal may be short on substance and long on rhetoric, any sign that both sides are pulling back from hardline positions would be seen as a positive boost to sentiment.
Source: Reuters
