BEIJING: China’s imports of iron ore and coal remained robust in August, providing a fundamental justification for the ongoing resilience in the price of the two major bulk commodities. Although there are several more factors driving prices than China demand, it’s also worth noting that crude oil imports likely slipped back somewhat in August, coinciding with a retreat in the price of global benchmark Brent crude. Imports of iron ore by China, buyer of about two-thirds of global seaborne supplies of the steel-making ingredient, were estimated at 89.26 million tonnes in August by Thomson Reuters Supply Chain and Commodities Research, based on vessel-tracking and port data.
While the shipping data doesn’t exactly dovetail with official data because of slight differences in when cargoes are assessed as having arrived for customs purposes, it was within 2.5 percent of the customs numbers over the first seven months of the year. Official data for August commodity imports will be released in about 10 days time. If the official numbers mirror the vessel-tracking data, it would mean August’s iron ore imports would be the second-highest on record, and the most in any month this year. Such strength in imports is being reflected in spot Asian iron ore prices .IO62-CNI=SI which rose slightly in August from July to finish the month at $59 a tonne, taking the year-to-date gain to almost 40 percent. Whether this can continue is largely dependent on whether China will actually start cutting steel output, which reached a record on a daily basis in June, before easing slightly in July.
Coal is also performing strongly on the back of rising Chinese import demand, which similar to iron ore has taken the market by surprise. China’s August seaborne coal imports are estimated at 18.12 million tonnes, down somewhat from July’s 18.9 million, but still the second-highest monthly total this year, according to ship-tracking data. The Thomson Reuters vessel-tracking data doesn’t exactly match Chinese customs data, as the official figures include overland imports by rail and truck, mainly from Mongolia.
However, the vessel data implies that China’s total coal imports in August will be fairly close to July’s official number of 21.21 million tonnes. Earlier in August it seemed from vessel-tracking data that China’s seaborne coal imports would slump in August, but a flurry of late cargoes from Indonesia boosted the total, implying increased demand for the low-rank coal typically supplied by the Southeast Asian nation. China’s year-to-date coal imports were up 6.7 percent in July, again providing fundamental support for the 32 percent rally this year in the benchmark thermal coal weekly index at Australia’s Newcastle Port. While both thermal coal and iron ore remain well-supplied markets, the strength in Chinese demand has boosted prices for both, a situation likely to persist as long as China’s imports remain robust.
