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China's iron ore imports surge to record as prices hammered

[SINGAPORE] China's iron ore imports jumped to a record last month, a sign that overseas miners are winning a greater share of the market in the world's biggest consumer. Steel exports soared as the nation sells its glut overseas.

Inbound iron ore shipments climbed 17 per cent to 96.27 million metric tons from a month earlier, according to customs data Wednesday. Full-year imports were 2.2 per cent higher at 952.72 million tons, also an all-time high.

The figures signal that exporters including Rio Tinto Group and BHP Billiton Ltd. in Australia and Vale SA in Brazil are managing to increase market share in China even as steel output and demand contract amid an economic slowdown. Supply expansion by the top miners has boosted oversupply and hurt prices while forcing smaller rivals to close. The steel-making raw material tumbled last month to the lowest in at least six years as demand growth stalled.

"China can get iron ore from Australia and Brazil so cheaply that there's less need for domestic supplies," said Ralph Leszczynski, head of research at Genoa-based shipbroker Banchero Costa & Co, estimating that domestic output fell 8 per cent last year. "The ridiculously cheap iron ore and freight rates have allowed mills to keep producing steel and flood international markets."

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To compensate for shrinking demand at home, steelmakers in China are exporting at record levels. Outbound cargoes of steel products rose 11 per cent to 10.66 million tons in December from the previous month, the second highest ever, according to customs data. For the full year, exports surged 20 per cent to 112.4 million tons, an all-time high. China makes about half the world's steel and buys more than two-thirds of seaborne iron ore.

Ore with 62 per cent content delivered to Qingdao retreated 4.1 per cent to $39.51 a dry ton on Wednesday, dropping for a seventh straight day, according to Metal Bulletin Ltd. The commodity bottomed at $38.30 on Dec. 11, a record low in daily prices dating back to May 2009.

"With prices dipping below $40 a ton early in December, there appears to have been some opportunistic buying," Australia & New Zealand Banking Group Ltd. said in a note. "However, the fact that a lot of that iron ore was stockpiled suggests end use demand remains tepid." Annual aluminum product exports and copper ore and concentrate importswere also at record highs. Shipments of aluminum products rose 9.8 per cent to 4.76 million tons in 2015, while imports of copper ore and concentrate advanced 13 per cent to 13.29 million tons, customs data show.