Via Macquarie:
China released preliminary trade data for March. We saw strong imports for iron ore and coal, while copper imports continue to have negative growth due to a high base. Steel and Al exports remained low YoY, but we expect increases in coming months as the export arbitrage opens.
Iron ore imports increased by 11% YoY to 95.56mt in March, and YTD imports climbed by 12.2% YoY to 271mt. This strong print suggests seaborne iron ore supply continues to respond to the high iron ore price, and also suggests a build of iron ore inventory in China as crude steel production is estimated to rise at a slower rate of around 7% YoY over the first quarter (official data not yet been released). Along with higher imports, China’s domestic iron ore production is also picking up, with Mysteel showing 266 mines average capacity utilisation rate rising from 60% last year to 67.2% by the end of this March. The rise in iron ore supply has clearly been driven by higher iron ore price, which jumped by over 40% YoY before the correction in April, and until ore prices drop to below US$60/t we would expect no change to the trend of rising supply.