Steel mills increase Ma Li’s iron ore imports by 20% in March

Yesterday, customs statistics showed that the steel export volume in March was 4.91 million tons, an increase of 98% from the 2.84 million tons exported in February. At the same time, it imported 5948 million tons of iron ore in March, an increase of 22.3% compared with February.

In the first quarter of this year, China imported 177.17 million tons of iron ore, a year-on-year increase of 14.4%. Qiu Yuecheng, an analyst at the well-known spot trading platform Ximoto Shinkansen, said that the high level of daily output of crude steel stimulated the demand for iron ore.

Customs statistics also show that the average price of imported iron ore in March was US$160.7/tonne. “The iron ore price rebounded in mid-March, the market has improved, steel mills and traders have increased the intensity of replenishment of stockpiles, increased the volume of restocking, and the port inventory has also increased.” Qiu Yuecheng said.

"Domestic steel mills have a profit level of 1-2 months," said Hu Yanping, an analyst at China United Steel Network. According to the data from the Ministry of Industry and Information Technology, the profits of the ferrous metal smelting and rolling processing industry (ie, the steel industry) increased by 26.1% from the same period last year (compared to the same period of last year).

According to the daily production level of 1.94 million tons in mid-March, the national crude steel output in 2011 will reach 700 million tons, which is more than 12% higher than in 2009. Hu Yanping pointed out that the "scale complexes" of some state-owned steel mills are still heavy, and many steel companies are blindly pursuing economies of scale. When Hu Yanping researched in Jiangxi, a person in charge of a steel plant stated that the primary goal of the steel mill this year is “10 million tons”.

CICC analyst Luo Wei stated in a research report on April 8 that since 2009, the profitability of the steel industry has turned sharply. This has provided a relatively easy environment for eliminating the implementation of backward production capacity policies.

However, it is difficult to support the rise of the high steel market. “The second quarter is the traditional peak season for demand. Under the inflationary environment, steel prices have a high momentum in the short-term,” said Qiu Yuecheng.

Qiu Yuecheng said that despite this, this year's demand is not as good as the same period last year, and the inventory pressure is also relatively large. According to data from the China Iron and Steel Association, in mid-March, China Steel Association included statistics on key statistics of iron and steel enterprises' stocks of 9,588,500 tons, and domestic steel prices also began to oscillate from late February. As of the end of March, the decline has exceeded 6%.