Dry Bulk Market: Iron Ore Import Licenses Witness Huge Jump
The Chinese government last month issued iron ore import licenses for 202 million tons. While the monthly licenses never equal the amount of iron ore that is actually imported in any given month, the 202 million ton level is very noteworthy as it is simply a huge amount. In comparison, the most recent peak in licenses seen last year was for a total of 140.8 million tons issued in September (actual imports that month came out to 102.8 million tons, which is the current record).
Overall, all signs are that Chinese iron ore imports will continue to set records this year. We continue to stress that robust and even record iron ore port stockpiles levels do not limit China’s iron ore import volumes. This has been our long-held view since 2014, and it is a view that continues to be proven. Going forward, it remains our view that the usage of domestic iron ore (which is of much lower quality than iron ore imports) will continue to be phased out. As we also examined in our reports last year, last year’s decision by the government to cancel a third of domestic iron ore mining rights strengthened our conviction even further.
Source: Jeffrey Landsberg, Managing Director, Commodore Research & Consultancy