2015 turned out to be a remarkable year for China as well as the Chinese steel industry in terms of making new records. China’s iron ore imports hit an all time high in 2015 at 953 mnt, as low cost shipments from major global miners flooded the Chinese market.
Imports jumped around 2.2% as compared to 2014, which was highest so far at 933.1 mnt. Australia was the largest contributor, followed by Brazil and South Africa. Australia exported 607.4 mnt iron ore, followed by Brazil at 191.6 mnt and South Africa at 45.3 mnt in 2015. The share of Australia in China’s iron ore import increased by 10.8%, Brazil by 12.1% and South Africa by 4% than the previous year. Even though South Africa and Ukraine are small contributors to China’s iron ore import in 2015, large suppliers – Australia and Brazil could not knock them out of the game, and they still succeed to maintain their position at 3rd and 4th respectively.
Global iron ore prices also took a deep dip in 2015 as compared to 2014. Average prices were at the level of USD 97.1/mt CFR China in 2014, which took a sudden fall and average prices stood at USD 55.3/mt CFR China in 2015. This rapid decline in prices occurred due to various components, which are slow economic growth, weak steel demand, Chinese industrialization out of the run and last but not the least the global supply glut caused due to increased production and export by major iron ore miners.
The term global glut has been around since a year or two. While some global iron ore players like Rio Tinto and BHP Billiton have ramped up their production in a bid to become the lowest cost producers, other new projects with huge capacities are coming up in the market. For instance, Gina Rinehart’s Roy Hill is all set to pump additional 55 mnt in the market. Meanwhile, Vale’s S11 D project, now under construction will commence its production by the end of 2017 to bring 90 mnt of the ore. This move by global miners to boost production has slashed iron ore prices below USD 40/mt over the past year. These miners have been increasing production capacities banking on China’s demand for iron ore in the coming years.
However, even as China imported a record high quantity of iron ore in 2015, the country’s crude steel production dropped during the year. According to China Iron and Steel Association (CISA), the crude steel production was 803 mnt in CY2015, the lowest since decades. Recently, the country announced its plans to cut down crude steel production by 100-150 mnt.
Major Iron Ore Exporters to China (Info-graph)
Quantity in mnt by China Customs
Source: Steel 360 Magazine