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China’s iron-ore imports in 2023 hit a record high, up 6.6% from a year before, customs data showed on Friday, thanks to stronger demand amid a lack of government-mandated steel output caps and higher-than-expected steel exports.

The world’s largest iron ore consumer brought in a total of about 1.18-billion metric tons in the past year, data from the country’s General Administration of Customs showed.

The 2023 total also marked the first rise since 2020 as Beijing introduced a cap on its annual steel output in 2021 and 2022 to help curb carbon emissions, reducing demand for the key steelmaking ingredient in those years.

China’s iron ore imports in 2021 and 2022 fell 3.9% and 1.5% year-on-year, respectively.

There were no such caps on steel output in 2023, however, with the world’s second-largest economy struggling to recover from the Covid-era in part because of lingering property woes.

Crude steel output in the first 11 months of 2023 rose 1.5% year on year to 952.14 million tons, official data showed, stoking higher demand for feedstocks.

One factor possibly underpinning higher ore demand is that mills preferred to use cheaper, lower grade cargoes while struggling to generate profits last year, said analysts, traders and mills.

It takes more lower grade iron ore to produce one ton of steel than with higher grade ore.

It’s likely that ore imports in 2024 will continue rising albeit at a slower pace with a forecast of mild growth in steel consumption, said Zhuo Guiqiu, a Shenzhen-based analyst at Jinrui Futures.

In December, China imported 100.86-million tons of iron-ore, down 1.83% from 102.74-million tons in November, as more mills started maintenance on blast furnaces as steel margins contracted.

The December volume compares to 90.86-million tons in the same month in 2022.

STEEL TRADE

China’s exports of steel products in December 2023 rose 43.2% on the year to 7.73 million tons, bringing the annual total shipments to a seven-year high of 90.26 million tons, a rise of 36.2%, customs data showed, beating market expectations.

“The surge in exports is because domestic demand weakened. The main increase was driven by long products, which have been hard hit by the struggling Chinese real estate sector,” said Tomas Gutierrez, head of data at UK-based consultancy Kallanish Commodities.

“China’s net steel exports will decline in 2024 but are likely to remain above the five-year average,” Gutierrez added.

The world’s largest steel producer also imported 665 000 t of steel products last month, bringing the 2023 total to 7.65 million tons, a decline of 27.6% from 2022.