Despite a fairly
solid Chinese crude steel production figure for March, iron ore prices slid
2.3% in Singapore on Tuesday as uncertainty about the real health of the
Chinese economy took hold.
China's crude steel
output in March fell 7.8% from a year earlier as steelmakers cut production
amid weaker-than-expected demand and growing inventories, but the drop was less
than the 10% forecast. The National Bureau of Statistics said China produced
88.27 million tonnes of crude steel last month. This, in turn, saw crude steel
output for the March quarter dip 1.9% to 256.55 million tonnes. The SGX price
for 62% fines ended Tuesday down 2.3% at $US19.65 a tonne.
A faltering recovery
in demand after China's week-long Lunar New Year holiday in mid-February has
put intense pressure on steelmaker margins and also seen a surge in portside
iron ore stocks to nearly 145 million tonnes – a two-year high.
The underlying
concern yesterday was about the sustainability of China’s 5.3% rise in gross
domestic product in the March quarter from the first quarter of 2023. While
that topped forecasts around 4.6% to 5%, it was only a fraction ahead of the
5.2% rate in the last quarter of 2023. While some Western media and analysts
highlighted the better-than-forecast performance, the reality is that it was a
weak outcome with production, retail sales, exports and imports, consumer and
producer price inflation, all worse than expected, especially compared to the
previous quarters.
Property especially
was terrible with another big fall in investment, sales, and new house prices.
Investment fell 9.5% in March, and new home prices in the country’s 70 major
cities dropped 2.2% – far worse than the 0.2% fall forecast by analysts.
Meanwhile, data from
the Pilbara Ports Authority showed a pickup in iron ore exports in March,
although total shipments for the three-month period fell from the same period
in 2023, especially to China.
Companies like BHP,
Fortescue, Roy Hill, and a couple of smaller groups ship iron ore through Port
Hedland. Total exports in March jumped to 50 million tonnes from 45.7 million
tonnes a year ago and 42.8 million in February. Shipments to China were down
slightly at 38.5 million tonnes from 38.8 million in March last year but were
sharply higher than the 33.5 million in February. Total shipments for the three
months were 131.3 million tonnes, just under the 132.5 million in the same quarter
of 2023, while shipments to China also fell short this year – 111.22 million
tonnes against 115.6 million tonnes.