Iron Ore Imports by China Post Biggest Fall in Seven Months as Mills Shut

Iron ore imports by China, the largest buyer of the steelmaking ingredient, plunged 13 percent in August for the biggest decline in seven months as steel production slowed and India reduced exports.

Imports fell to 44.6 million metric tons, from 51.3 million tons in July, according to figures provided by China’s General Administration of Customs. Purchases dropped 10 percent from 49.7 million tons a year earlier, data compiled by Bloomberg showed.

Steel prices in China fell as much as 17 percent between April and July as the government curbed property speculation, slowing demand for steel in construction. About 40 percent of steelmakers in the country idled plants or put them on maintenance, the China Iron and Steel Association said Aug. 3, without specifying the period.

“Demand fell and forced buyers to hold off purchases,” said Zhang Yong, an analyst with researcher Mysteel.com. “There were also disruptions from India in July-August.”

The southern Indian state of Karnataka, the country’s second-largest producer of the ore, banned exports starting July 26. India’s ore exports for July fell 27.6 percent to 4.74 million tons from a year earlier, according to the Federation of Indian Mineral Industries. The country also raised freight charges and taxes on the exports.

Weaker Steel Production

Steel production in China, the biggest maker, is also falling as the government closes obsolete plants and reduces power supply to reach energy efficiency targets.

Steel supply may fall 9.6 percent for the rest of the year because of the power cuts, Mysteel said in a report Sept. 8.

The restrictions may lead to lower iron ore imports starting late September, Zhang said. Spot prices for 62 percent-ore arriving at China’s Tianjin Port have fallen 5.1 percent in the past three week to $140 a ton yesterday, according to the Steel Index.

Rio Tinto Group, the world’s second-biggest exporter of iron ore, agreed to a 13 percent price cut for the material for the quarter starting Oct. 1 as demand slumped.

Iron ore imports by China rose 0.1 percent to 405 million tons in the first eight months from the same period a year ago, the customs office said.

China exported 2.8 million tons of steel products last month, the customs said. Shipments more than doubled to 30.9 million tons in the first eight months from a year ago.