By Clyde Russell
LAUNCESTON, Australia (Reuters) – China’s imports of iron ore and seaborne coal are on track for a soft start to the year, with January arrivals declining to multi-month lows.
However, the price trends for the two key bulk commodities are divergent, with iron ore holding up while thermal coal slides to the weakest in nearly four years.
China, the world’s biggest iron ore buyer, is expected to import 99.5 million metric tons of the key steel raw material in January, according to commodity analysts Kpler.
That would be down from the official customs figure of 112.5 million tons in December, and would be the lowest monthly total since June’s 97.61 million.
There is a note of caution around January’s iron ore imports, due to the week-long Lunar New Year holidays which this year fell at the end of this month and into early February. This may result in some cargoes being pushed from January into February.
For coal, China’s seaborne imports of all grades are estimated by Kpler at 27.97 million tons in January, down 26% from December’s 37.59 million.
Customs data showed coal imports of 52.35 million tons in December, but this includes overland arrivals from neighbouring countries such as Mongolia and Russia.
Coal imports have in the past tended to soften in January and February as peak winter demand passes, but the decline in January this year from December is far larger than the 9% recorded in January 2024 and the 10.9% from January 2023.
China, the world’s largest producer, consumer and importer of coal, may need less from the seaborne market as domestic supplies increase.
December coal production was 439 million tons, up 4.2% from the same month a year earlier, while annual output was up 1.3% to 4.76 billion tons, according to official data released on Jan. 17.
The robust increase in coal output has led to weaker domestic prices, with consultants SteelHome assessing thermal coal at Qinhuangdao at 765 yuan ($106) a ton this week, down 12.6% from the 2024 high of 875 yuan in September, and the weakest since April 2021.
The slump in China’s domestic coal prices is feeding through to seaborne grades, with key grades from top exporters Indonesia and Australia dropping.
Indonesian coal with an energy content of 4,200 kilocalories per kilogram (kcal/kg) was assessed by commodity price reporting agency Argus at $48.76 a ton in the week to Jan. 24, the lowest since April 2021 and down 16.2% from the 2024 peak of $58.17 in March.
Australian coal with an energy content of 5,500 kcal/kg, a grade popular with Chinese buyers, was at $80.12 a ton in the week to Jan. 24, down 17.1% from its 2024 high of $96.66 in March and the lowest since July 2021.
RESILIENT IRON ORE
While coal prices are reflecting China’s domestic market dynamics, iron ore is taking a slightly different path.
Despite the likely decline in January imports, the price of futures traded on the Singapore Exchange has remained stable in recent weeks.
The contract ended at $101.55 a ton on Wednesday and has climbed 4.4% from the recent low of $97.31 on Jan. 6. The price has held above $100 a ton since October, apart from a period of five trading days earlier this month.
The price reflects that iron ore imports by China have held up in recent months despite the small decline in steel output in 2024.
But unlike coal, there may also be support for iron ore from a sentiment perspective, with some market participants optimistic that Beijing’s stimulus efforts will bear fruit in 2025 by stabilising the beleaguered property sector and boosting consumer demand for manufactured goods.
The iron ore market is also so far shrugging off the threat of a trade war by the administration of new U.S. President Donald Trump, who has said that he may impose tariffs of up to 60% on imports from China.
The views expressed here are those of the author, a columnist for Reuters.
(Editnig by Kim Coghill)
Comments