* July imports third highest on record at 82.5 mln T
* Low prices driving sales despite weak steel demand growth
* China July steel exports up 14 pct to 8 mln T
(Adds steel export figures)
By David Stanway
BEIJING, Aug 8 China's iron ore imports jumped
nearly 11 percent in July from the previous month, customs data
showed, as buyers took advantage of lower prices for the
steelmaking raw material and stocked up, despite weak domestic
Demand from China, which buys around two-thirds of all the
iron ore sold on global markets, has remained resilient, helping
to justify surging production from major suppliers such as Rio
Tinto and BHP Billiton , which
has driven iron ore prices down by around a third this year.
July's total shipments of 82.52 million tonnes represented
the third highest on record, with steel mills in China
continuing to produce at high rates. Margins for steel mills
have also improved as a result of lower iron ore and other input
"The import numbers are generally pretty volatile and you
get up months and down months - the June number looked a little
low so July represents a higher number, but if you look at the
averages over the quarter, it is pretty much in line," said
Graeme Train, analyst with Macquarie in Shanghai.
Iron ore prices over July were relatively steady, remaining
within a range of $93.60-$98.00 per tonne and ending the month
at $95.60, up 1.9 percent from the end of June, with spot market
activity relatively weak, according to data from The Steel Index
In a report published on Thursday, the China Iron and Steel
Association (CISA) said that iron ore oversupply widened in
July, adding that it expected prices to continue to edge
downwards in coming months.
The weak prices have helped weed out some high-cost
production from the market and benefited Australian producers,
who have steadily raised their share of China's total imports.
Anglo-Australian Rio Tinto, the world's No. 2 miner which
gets the lion's share of earnings from iron ore, took advantage
of that trend and posted a forecast-beating 21 percent rise in
first-half profit on Thursday.
Australia's share of Chinese iron ore imports was 61 percent
of the total in June and 56 percent in the first half of the
year, against about 50.8 percent for the whole of 2013.
STEEL OUTPUT SLOWS
Shipments to China from Port Hedland, Australia's main iron
ore port, rose 4.8 percent on the month to a record high 30.57
million tonnes in July, suggesting that Australia's share of
China's total imports increased further.
"The strength in shipments from Australia is knocking out
just as many tonnes from high-cost producers in the global
market as it is from high-cost domestic producers," said
According to preliminary estimates by industry consultancy
Custeel, average daily steel output in China fell 2.2 percent
over the July 21-31 period, suggesting that producers were
finally responding to weakness in demand.
With steel output starting to decline slightly and iron ore
imports still at a relatively high level, a supply glut of the
steelmaking ingredient could worsen, with imported ore
stockpiles at major ports set to rise further in coming months.
While port inventories fell for two consecutive weeks to
reach 111.95 million tonnes by August 1, they remain 46 percent
higher than at the same time last year, according to data from
Chinese steel product exports were strong in July, rising 14
percent to 8.06 million tonnes, the customs data showed.
With actual domestic consumption remaining stagnant this
year, producers diverted 97.2 percent of their additional output
to overseas markets in the first five months of the year,
according to CISA data.
British consultancy MEPS said this week that it expected
China to export 73 percent of its increased steel output over
the whole of 2014.
It said Chinese exports were also driving down overseas
prices, and CISA has warned that domestic producers are at risk
of further trade restrictions in the second half of the year.
(Editing by Richard Pullin and Muralikumar Anantharaman)