China 2021 Iron Ore Imports Retreat from Record on Steel Curbs

China's iron ore imports dropped in 2021, down 4.3% from the previous year's record annual high, as steel production curbs imposed to combat pollution dented demand and pulled prices of the key steelmaking material off historical highs.

The world's top iron ore consumer brought in 1.12 billion tonnes of the commodity last year, compared with 1.17 billion tonnes imported in 2020, data from the General Administration showed on Friday.

For December, China imported 86.07 million tonnes of the raw material, down 18% from November, the data showed.

China consumed iron ore at a rapid rate in the first five months of 2021, backed by robust steel production as mills enjoyed decent profits underpinned by a recovery in demand after the first waves of the coronavirus pandemic.

However, imports then started to contract on an annual basis as authorities urged steel mills to cut production to meet an annual target of keeping crude steel output flat. Slowing construction activity also muted downstream demand for the industrial metal.

During June-December 2021, China's iron ore imports slid nearly 10% from the same period a year earlier. Benchmark iron ore futures prices on the Dalian Commodity Exchange dived 45% by end-December from the peak of 1,239 yuan per tonne logged in May.

"For 2022, iron ore supplies from major miners are expected to remain stable, while the demand-side is largely decided by authorities' policy towards steel output controls," said Zhuo Guiqiu, analyst with Jinrui Capital.

A government-backed consultancy expects iron ore imports to continue to decline to around 1.08 billion tonnes in 2022 on falling steel production and increasing usage of steel scrap.

Steel trade
The customs data on Friday also showed the country's steel products exports jumped 24.6% to 66.9 million tonnes in 2021 from a year earlier, though mills and traders had been urged by Beijing to ensure supply for domestic market.

China's steel imports last year dropped 29.5% to 14.3 million tonnes, according to the customs.

(Reuters - Reporting by Min Zhang and Dominique Patton; Editing by Christian Schmollinger & Shri Navaratnam)