SHANGHAI, Jun. 14 (SMM) -- Customs statistics show China’s iron ore imports in May were 63.84 million mt, up 10.66% MoM and 19.77% YoY, and were only lower than February’s 64.98 million mt this year. The increase was in contrast to sluggish demand in April and May. Steelease attributes it to following causes:
First, after continuous declines in April, the IODEX has fallen below the USD 140/mt mark, so steel mills and traders increased their imports;
Second, data show average daily crude steel output dropped from more than 2 million mt of April, but was still high near 1.975 million mt, which means actual demand of raw materials did not drop much. Continually falling fine powder prices also led to a dramatic increase in pressure on domestic fine powder producers, especially entering May when most pure dressing plants halted production. Some owning mines were also forced to halt production due to high production costs. Also, some traders became unwilling to sell. Production halts at producers and supply cuts by traders led to a significant drop in market supply, so steel mills increased iron ore imports to meet production needs.
Moreover, as news on supportive domestic policies and others flew out in May, most market players expect prices may "rebound" at any time, so purchases increased.
As the result of many factors, iron ore imports climbed significantly in May. For iron ore imports in June, Steelease holds the view that despite of increased bullish orders, quarterly financial settlements in June mean extremely large purchases are not likely to show if the market direction is still vague and there being no emergent stocks replenishments. As such, imports in June will drop slightly from May, but will also remain high above 60 million mt.