• From a multi-year high of 38.38 Mt last week, global seaborne iron ore exports plunged to the lowest level since the start of April in the first seven days of July at 29.37 Mt. Australian exports from major miners BHP, FMG, Rio Tinto, and Roy Hill all slowed sharply, while in Brazil, Anglo America, CSN, and Vale saw a steep drop in exports. This decline was to be expected as most miners try to maximise shipments in the run up to the end of a quarter or fiscal year for reporting purposes, resulting in a sharp drop in exports in the first week of the following quarter. A similar trend was in evidence at the start of July last year and we expect exports to rebound to more typical levels before the end of this month.
• However, the impact of a short-term fall in departures from Australia and Brazil on the rate of iron ore imports in North China is likely to be cushioned by a build-up of iron ore vessels waiting to discharge at the country’s ports since the start of July. High port stockpiles have slowed the rate of discharge at some terminals. At 22.23 Mt, China’s iron ore imports last week were below the week before, but still slightly higher y/y.
• Crude steel output at China Iron and Steel Association (CISA) member mills slowed further in the final ten days of June, dropping to 2.17 Mt/day, sharply below the multi-month high of 2.25 Mt/day recorded over 1-10 June, according to the industry association. This implies monthly output of 66.00 Mt at CISA member mill in June, down from 67.95 Mt in May and 2.06% lower y/y. The monthly decline was expected; China has now entered a period of softer steel production however, the annual decline implies a return to contraction for nationwide output after a surprise 2.70% expansion in May. It remains our view that China’s annual crude steel output will fall y/y in 2024.
• Weaker steel sector data from China was accompanied by a slide in the price of iron ore. The delivered price of 62% Fe iron ore in North China (TSI) retreated from a recent peak of $113.06/t on 3 July to $108.74/t at close of business on 10 July. Nevertheless, despite recent falls, the iron ore price continues to outperform Chinese domestic steel prices, with the price of rebar falling sharply in recent weeks. This has tightened margins at Chinese mills and means we believe there is scope for further declines in the iron ore price through the third quarter.

Crude steel output at CISA member mills (Mt/day)

Source: CISA

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