China, the world’s largest consumer of iron ore, imported a record amount of the steelmaking ingredient in 2023, according to official data. The country brought in about 1.18 billion metric tons of iron ore last year, up 6.6% from 2022, as it sought to meet the rising demand for steel amid a lack of government-mandated output caps.
The increase in iron ore imports marks the first rise since 2020 when Beijing introduced a cap on its annual steel production to help curb carbon emissions. As the Covid era lingered, lingering property woes caused the world’s second-largest economy to struggle, leading to the lifting of the cap in 2023.
Steel manufacturers widely use iron ore, a key component of steel, in construction, infrastructure, and manufacturing.
China produces more than half of the world’s steel and relies heavily on imports of iron ore, mainly from Australia, Brazil, and South Africa.
The price of iron ore surged to a record high of over $230 per ton in May 2023, driven by strong demand and supply disruptions. However, it has since fallen to around $150 per ton, as China stepped up measures to cool down the overheated market, such as imposing tariffs, quotas, and inspections on imports, and cracking down on speculation and hoarding.
The high cost of iron ore has also squeezed the profit margins of Chinese steelmakers, who have faced pressure from environmental regulations, power shortages, and trade tensions. Some mills have reduced their output or switched to cheaper, lower-grade ores, which require more processing and emit more pollution.
China’s steel exports also rose to a seven-year high of 90.26 million tons in 2023, up 36.2% from 2022, as domestic demand weakened and global demand recovered. The struggling Chinese real estate sector has hit long products, such as bars and rods, hard, leading to the main increase.
However, China’s net steel exports are likely to decline in 2024, as the government aims to cut its crude steel output by 10% from 2020 levels, and as other countries impose anti-dumping measures or increase their production.
China’s iron ore imports are expected to continue rising in 2024, albeit at a slower pace, with a forecast of mild growth in steel consumption. Analysts say that the long-term outlook for iron ore demand remains positive, as China pursues its green and high-quality development goals, which will require more steel for new infrastructure, renewable energy, and electric vehicles.
Despite the challenges and uncertainties, China’s iron ore and steel industry has shown resilience and adaptability in 2023 and has contributed to the country’s economic recovery and social stability. As the world’s largest importer and exporter of iron ore and steel, China also plays a vital role in the global market and seeks to enhance its cooperation and communication with other major producers and consumers.
Source: Kitco
