Iron price rallies as China imports leap to over 1 billion tonnes

Benchmark iron ore prices climbed on Tuesday after trade data showed Chinese imports of the steelmaking raw material topped 1 billion tonnes for the third year in a row as Beijing’s efforts to stimulate the economy pays off.

The Chinese import price of 62% Fe content ore was pegged at $97.03 per dry metric tonne according to Fastmarkets MB, a more than 4-month high. Iron ore prices averaged $91.85 in December.

China’s iron ore purchases in December totalled 101.3m tonnes, up nearly 12% from July and 17% from last year customs data showed, marking the highest level of imports since September 2018.

Iron price rallies as China imports leap to over 1 billion tonnes

Full year iron ore imports was the second best on record at 1.069 billion tonnes, up 0.5% from last year and within shouting distance of 2017’s record 1.075 billion tonnes.

Iron ore peaked in July last year just shy of $126 a tonne, the highest since January 2014, but declined over the summer months as fears of a shortage on the seaborne market receded.

The price of iron ore is up 30% following a dam burst at Vale’s Brumadinho operations in Brazil in January 2019 that killed nearly 300 people. In response, the world no 1 producer initially suspended 93m tonnes of output.

However, the Rio de Janeiro-based company managed to bring much of that capacity back online and ended the year with only around a 5% drop in output to an estimated 310m tonnes.

Before the disaster Vale was flagging strong growth with a medium term target of roughly 400m tonnes in annual production thanks to its $14 billion S11D project that on its own adds 95m tonnes in new capacity.