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Chinese iron ore imports are unlikely to show any signs of
easing in the near-term with imports likely to stay elevated
despite economic malaise persisting as signalled by continued
weakness in industrial production. Strong imports could see
benchmark iron ore prices facing renewed price pressures amid
Chinese inventory being replenished with every passing week.
IHS Markit Commodities at Sea
iron ore trade flow intelligence suggests September imports will
come in above 90 mt for the third consecutive month and could even
surpass a 19-month high registered in August.
We have identified close to 600 vessels in-transit carrying 100
mt of iron ore volumes to Chinese ports amid ongoing recovery in
shipments from key suppliers Australia and Brazil. Iron ore export
volume recovery in Brazil is running slightly ahead of market
expectations with shipments increasing both in Northern and
Southern systems. We believe Brazilian iron ore major Vale will
continue to ramp up exports in a bid to make up for volume loss
from the January Brumadinho dam disaster. Similarly, having
recovered from port maintenance, Australian exports will likely
maintain a steady uptrend over the next few months. According to IHS Markit Commodities at Sea,
around 44 mt of Brazilian and 41 mt of Australian iron ore is
in-transit to China.
Iron Ore Heading to China Shows No Signs of
Easing
Despite ongoing slowdown in the industrial economy, inventory
restocking cycle is likely to support medium term Chinese iron ore
import demand and we expect Chinese iron ore demand to stay
resilient in the months ahead.
With macroeconomic indicators further deteriorating from both
the supply and demand side in August, IHS Markit Economics expects
aggressive fiscal stimulus and targeted credit expansion. Beijing's
infrastructure stimulus push could also lend support to moderating
crude-steel production aiding import demand, in our view.
Posted 20 September 2019 by Rahul Kapoor, Vice President, Global Head of Commodity Analytics & Research, Maritime & Trade
