Imports of iron ore in China attained record heights in March 2009, with China apparently becoming the net importer of steel in the process.
With traders betting the stimulus plans of the government, Chinese copper and iron ore imports reached record levels in March 2009 while the economic activity was relatively low, as reported by THE WALL STREET JOURNAL.
Imports of copper, semi-finished copper products and copper alloy to China increased 56% on year, reaching 374,957 Metric Tons, surpassing 329,311 Tons in February, as per the Chinese customs agency. Also, the country’s steel mills shipped 52.1 Million Tons iron ore, which was 46% higher on YOY basis. However, steel production in the country didn’t increase with the same rate at which these raw materials were imported during January-February 2009.
China is claimed to have turned into a net importer in March 2009, though it is yet to be verified. It is worth noting that previously, steel exports were the main driver for the development in Chinese steel consumption.
Moreover, depreciation of most of the global currencies and weaken global steel demand led to a stark decline in the export of steel from China. Besides, the exports from overseas countries to China grew strongly, which, in turn, affected the domestic market to a larger extent.
Commodity importers of China are expecting a rebound in the underlying steel consumption. Furthermore, the stimulus aid is starting to have a positive impact on construction activities. Consequently, demand for raw materials and machinery are also surging. Almost every Asian country is witnessing a significant growth recovery in its exports which are based on shipments to China.
China appears to be the single nation among the major world economies, which boasts of strong banking, government, corporate and household balance sheets, regardless of global economic crunch.
Analysts believe that record imports may lead to oversupply, slowing down the speed of any revival in demand. Large scale imports of iron ore could result in stockpile that, in turn, would pull down the steel prices.
According to a Research Analyst at RNCOS, “Consumers and private sector investors do not seem to be regaining confidence in order to keep-up the momentum of Chinese economy. Although there are indications of stabilizing demand, any big recovery in demand for steel or iron ore doesn’t look feasible in 2009 atleast.”
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