Column: China’s commodity import trend driven by prices, not economy
China's imports of major commodities are often viewed through the prism of the performance of, and outlook for, the world's second-biggest economy.
The volatility in the price of iron ore took another turn on Monday with the Northern China benchmark import price jumping 4.2% to $59.90 per dry metric tonne (62% Fe CFR Tianjin port) according to data supplied by The Steel Index.
Last week saw the price gain 9.8% within the space of three days to just short of $60 before falling back. The latest gyrations follow an insane 19.5% one-day rally in early March, the biggest jump since the introduction of a spot pricing system nearly a decade ago.
The steelmaking raw material still boasts a 39.6% rise year to date and a 62% surge from near-decade lows reached mid-December as Chinese imports continue at a record breaking pace.
The latest leg up comes on the back of speculation that BHP Billiton (ASX:BHP) and Rio Tinto (LON:RIO) may cut their full-year iron ore guidance this week when the Australian giants announce March quarterly numbers.
According to Deutsche Bank analyst Paul Young, number three producer BHP is set to post flat quarterly iron ore shipments compared to the December quarter and 2015 tally and would be hard-pressed to reach its 270m tonnes per year guidance, Financial Review reports.
The paper also quotes UBS analyst Glyn Lawcock saying that Rio’s iron ore output “may surprise to the downside”, with shipments out of Western Australia possibly coming in at 77.6 million tonnes and stockpiles largely depleted:
That represents an annualised run rate of 311 million tonnes. Rio has guided to ship 335mtpa from the Pilbara for 2016, and “around” 350mtpa globally.
Comments
Richard Haselwood
Hoping this might give some support to coking coal prices.