|Iron ore imports down by 1 pct in 2018 YoY, first yearly drop since 2010
|China - 2019 January 14
China's 2018 iron ore imports fell by 1 pct from the previous year, the first annual decline since 2010, according to data from the General Administration of Customs.
Full-year iron ore imports fell to 1.064 bln tons in 2018 from an annual record of 1.075 bln tons in 2017, the data showed. The ore imports, though, still exceeded 1 bln tons for a third year running.
Arrivals for iron ore shipments in December rose to 86.65 mln tons, up from 86.25 mln tons in November, official customs data showed.
The fall in iron ore purchases for 2018 came as a 70 pct plunge in profit margins since late October cut the incentive for steelmakers to ramp up output and restock raw materials.
China is also expected to reduce iron ore consumption in 2019, as steel output declines amid waning demand in both domestic and global markets, the China Metallurgical Industry Planning and Research Institute said last month.
However, the decline could be cushioned somewhat as mills alter their production strategies.
"With lower profit margins this year, steel mills would increase consumption of lower-grade iron ore, while reducing demand for medium- and high-grade ore," said Wang Yilin, an analyst at Sinosteel Futures.
She also expected steel mills to cut output from electric-arc furnaces but maintain steady operation of blast furnaces, which will underpin support for iron ore.
Electric-arc furnaces only use scrap metal and electricity to produce crude steel, but their costs could still be higher than blast furnaces that use coking coal and iron ore.
"China's supply side reforms have been digested in the past two years and profits for steelmaking will return to a reasonable range in 2019," Wang said.
Average profit margins for rebar production now hover around 300 yuan (USD 44.50) a ton, while hot-rolled coil production is barely maintaining a profit, according to data tracked by Jinrui Futures and Sinosteel Futures.
Steelmaking profit margins hit a peak of more than 1,500 yuan a ton in late 2017.