Brazil’s sliding iron ore shipments impact China’s imports

China’s iron ore imports fell to an 18-month low in April, at 80.77m tons, the lowest since October 2017 according to the data from the General Administration of Customs. The country’s iron ore imports reached 340.21m tons in the first four months of 2019, down 3.7% year-on-year. The low imports follow a significant storm in northern Brazil in late March which disrupted mining operations and Vale’s production cuts following January’s tailing dam disaster. Vale was forced to close 92.8m tons of its 400m tons annual production capacity after the disaster at Brumadinho. The company’s iron ore production reached 72.870m tons in the first quarter of 2019, down 28% from the previous quarter and down 11% year-on-year.

Brazil’s iron ore exports registered a significant fall in April 2019, down 29% to 18.34m tons compared to the same month last year, the lowest monthly volume since January 2012, according to Secex data. In total, the country exported 97.2m tons between January and April, down from 111.9m tons recorded during the same period last year, according to Refinitiv. The production loss is expected to persist until 2020, according to Reuters.

However, China’s iron ore demands are expected to decline in the coming months due to increased environmental measures opted in some steel producing cities. For example, Reuters reports that the government of Tangshan ordered mills to reduce operations in May by around 30 percent from 20 percent in April, which would affect approximately 120,000 tonnes of crude steel output and 200,000 tonnes of iron ore demand.

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