In 2024, China, the world’s largest consumer of iron ore, saw a significant rise in its iron ore imports, marking a second consecutive year of growth. According to customs data released by the General Administration of Customs, China imported approximately 1.24 billion metric tons of iron ore in 2024, an increase of 4.9% from the previous year. This surge came despite a slowdown in the domestic economy, which had a noticeable effect on steel production. Nevertheless, the demand for iron ore remained strong, largely driven by cost-competitive steel production methods and strategic purchasing by traders.
Record High Imports:
In 2023, China imported 1.18 billion metric tons of iron ore, a notable 6.6% increase from the previous year. The 2024 imports of 1.24 billion metric tons represent an even higher total, solidifying China’s position as the dominant global consumer of iron ore. These imports were spurred by relatively low prices for iron ore and the continuing demand for steel, despite economic challenges and lower steel production output.
Resilient Demand Despite Sluggish Steel Production:
Although China’s steel output declined by 2.7% year-on-year during the first 11 months of 2024, largely due to weaker domestic demand and challenges within the real estate sector, the demand for iron ore remained robust. Analysts suggest that iron ore remained more cost-competitive compared to other methods of steel production, particularly the electric arc furnace-based process, which is reliant on scrap metal. Due to limited availability and high costs of scrap material, electric arc furnace steelmakers scaled back production or underwent maintenance, further boosting the preference for iron ore-based steel production.
The blast furnace-basic oxygen furnace process, which uses iron ore as a primary raw material, remains a more cost-effective option for many steel producers in China. As a result, the demand for iron ore stayed strong, ensuring that the country continued to import large quantities of the raw material despite the overall dip in steel output.
Strategic Purchasing by Traders:
Another factor contributing to China’s high iron ore imports in 2024 was the behavior of traders. Many traders had purchased high-cost iron ore early in the year and continued buying more in the latter part of 2024. This was done in an effort to average out their overall production costs and reduce losses caused by the earlier high purchase prices. By increasing imports at lower prices, traders aimed to mitigate the financial impact of buying more expensive ore in the past.
Price Slump and Stockpile Build-up:
Higher iron ore imports, coupled with the continuing demand for steel production, led to a pile-up of iron ore at Chinese ports. By December 27, portside stocks had climbed by 28% year-on-year, reaching a total of 146.85 million metric tons, according to consultancy Steelhome. This accumulation of stock coincided with a significant drop in iron ore prices, which fell by 31% during 2024.
The price decline, driven by an oversupply in the market, made iron ore more affordable, further encouraging imports. These lower prices also attracted traders looking to stockpile iron ore in anticipation of future price increases, a trend expected to continue into 2025.
December Imports and the Outlook for 2025:
China’s iron ore imports in December 2024 saw a noticeable month-on-month increase of 10.4%, reaching 112.49 million metric tons compared to 101.86 million metric tons in November. This December total was also higher than the 100.86 million metric tons imported in the same month of 2023. This uptick suggests that Chinese traders are already preparing for future demand, stockpiling iron ore in anticipation of higher prices and continued steel production needs in 2025.
The demand for iron ore is expected to remain strong throughout 2025, despite China’s ongoing economic challenges, including a persistent property crisis that continues to dampen domestic steel demand. Analysts predict that imports could reach even higher levels in 2025, as traders continue to take advantage of the lower prices to stockpile ore. With iron ore prices remaining relatively low, and the global demand for steel showing no signs of abating, China’s role as the world’s largest iron ore importer is likely to continue.
Steel Trade and Export:
In addition to its iron ore imports, China also saw growth in its steel trade. In December 2024, the country exported 9.73 million metric tons of steel products, a 25.9% year-on-year increase and a 4.9% rise compared to November. This brought the total steel exports for 2024 to 110.72 million metric tons, marking the highest level since 2015. The country’s steel exports increased by 22.7% over the previous year, highlighting China’s continued dominance in the global steel market.
On the import side, China brought in 621,000 metric tons of steel in December 2024, a decline of 10.9% compared to 2023. This drop in steel imports is in line with the broader trend of decreasing demand for steel within China, particularly as the construction and real estate sectors face ongoing challenges.
