Iron Ore Tells a Different Story to the China Tariff Pain Narrative
But while that figure may look soft, it's largely because supply was constrained by weather events in Australia, which cut shipments from China's top supplier.
SEATTLE (Scrap Monster): Concern is mounting over just how big a hit the Chinese economy is going to take from the massive tariffs imposed by the United States, but so far the commodity most at risk is seemingly unaffected.
Iron ore is the major commodity most exposed to China, given that the world's second-biggest economy buys more than 70% of all seaborne volumes, which it uses to produce just over half of global steel.
But iron ore prices and import volumes have been largely resilient since U.S. President Donald Trump launched his trade war against China, which has escalated to the point where the United States imposes a tariff of 145% on its hitherto biggest trading partner.
Iron ore contracts traded on the Singapore Exchange ended at $99.35 a metric ton on Wednesday, having climbed since hitting a seven-month low of $96.20 on May 1.
The price has been trading in a relatively narrow range since October, with a high of $110.55 early in that month and the low at the start of May.
At the same time China's imports of iron ore have eased slightly, with customs data showing first quarter arrivals down 7.8% from the same period a year earlier to 285.31 million tons.
But while that figure may look soft, it's largely because supply was constrained by weather events in Australia, which cut shipments from China's top supplier.
The supply disruption is evident in China's port inventories , with data from consultants SteelHome showing they fell to a 14-month low of 133.8 million tons in the week to April 25.
Stockpiles were as high as 147.5 million tons in mid-February, showing that steel mills have drawn on inventories in order to keep production going during the period of supply disruption from Australia.
China's imports of the key steel raw material are expected to have recovered in April, with commodity analysts Kpler tracking arrivals of 101.4 million tons, up from the March customs figure of 93.97 million.
China's steel output is also holding up, with March's 92.84 million tons being a 10-month high and up 4.6% from the same month in 2024, according to official data.
The overall picture so far this year for iron ore is that any import weakness is down to supply disruptions, and that China's demand has remained relatively solid.
If China's inventories are to show the usual seasonal build heading into the northern summer peak demand for steel, it's also reasonable to expect that iron ore imports will hold up beyond April.
Courtesy: www.reuters.com