March 8, 2019 / 5:30 AM / 8 months ago

China's iron ore imports hit 10-month low in February on holiday break

BEIJING (Reuters) - China’s imports of iron ore fell to a 10-month low in February, customs data showed on Friday, curbed by a slowdown in trade during a week-long national holiday and a steep run-up in prices.

FILE PHOTO: Cranes unload imported iron ore from a ship amid snow at the iron ore terminal of Qingdao port in Shandong province, China December 11, 2018. Picture taken December 11, 2018. REUTERS/Stringer/File Photo

China brought in 83.08 million tonnes of iron ore last month, the least since April, General Administration of Customs data showed, well down on 91.26 million tonnes in January and 1.5 percent below 84.27 million tonnes a year ago.

China celebrated its Lunar New Year in early February causing steel mills and traders to shut down business for holiday breaks of up to two weeks, which crimped ore demand.

For the first two months of 2019, iron ore arrivals reached 174.4 million tonnes, down 5.5 percent from 184.6 million tonnes in the same period a year earlier.

“Mills typically replenish their stocks ahead of the holiday, which leads to an obvious increase of imports in January and a dip in February,” said Fan Lu, analyst at Sinosteel Futures.

“The sharp drop on February iron ore also came as major iron ore suppliers reduced shipment due to hurricane weather.”

Chinese steel mills also delayed purchase after benchmark ore prices soared as much as 24 percent following a deadly dam collapse at a Vale SA mine in Brazil in late January.

This has lead to rising inventories at Chinese ports, which reached 146.05 million tonnes of March 1, the highest in more than five months, data compiled by SteelHome consultancy showed. [SH-TOT-IRONINV]

Imports are likely to be curbed again in March as Chinese steel mills, especially in the north, are expected to cut output to comply with tighter environmental rules to improve air quality.

Vessel-tracking and port data compiled by Refinitiv suggests China will import about 71.86 million tonnes of seaborne iron ore in March.

Officials in 28 northern Chinese cities, including the top steelmaking city of Tangshan, face central government evaluations at the end of March on their performance in curbing air pollution over winter.

Tangshan, which accounts for more than 10 percent of China’s crude steel output, ordered a level 1 smog alert from March 6 until further notice, forcing mills to cut output by 40 percent to 70 percent or even stop production.

Wu’an, another major steel producing city in Hebei province, has stepped up production restrictions on heavy industry by an extra 10 percent in March.

Reporting by Muyu Xu and Dominique Patton; editing by Richard Pullin

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