Iron ore imports hit record in 2020

China's iron ore imports hit a record 1.17 billion metric tons in 2020, with the average import price up 7.3 percent year-on-year to $101.7 per ton, which analysts say reflects robust demand in the downstream steel market and a continued and stable recovery of the Chinese economy.

The amount exceeded the previous record of 1.08 billion tons in 2017, said the General Administration of Customs.

The corresponding value of imported iron ore also hit a record 822.87 billion yuan ($127 billion) last year, an increase of 17.4 percent year-on-year, also a record.

China exported about 48.83 million tons of steel in the first 11 months, down 18.1 percent year-on-year, while the country's imports jumped 74.3 percent year-on-year to 18.86 million tons during the same period. The country's iron ore imports rose 10.9 percent year-on-year to 1.07 billion tons in the January-November period, exceeding the amount imported in the whole of 2019, Xinhua News Agency cited the Ministry of Industry and Information Technology.

Zhu Yi, a senior analyst for metals and mining at Bloomberg Intelligence, said China's demand for iron ore could remain strong this year due to higher output of crude steel, boosted by rising demand from downstream sectors such as infrastructure construction and vehicle manufacturing.

"The supply of iron ore from overseas miners will pick up in 2021, as production and shipments were disrupted by COVID-19 and the global iron ore market was in short supply previously," Zhu said.

Iron ore is essential for the production of steel, which in turn is essential in maintaining a strong industrial base. China sees 80 percent of its iron ore demand imported, mostly from Australia and Brazil.

Iron ore imports from these two countries currently account for 60 percent and 20 percent of the country's total imports of the commodity, respectively.

"The price of iron ore may stay high in the first quarter this year due to potential production losses from weather issues, and then start to decline later in the year," she added.

This is against the backdrop that China's economy grew by 2.3 percent in 2020, with major economic targets achieving better-than-expected results and industrial output expanding by 2.8 percent year-on-year in 2020 and 7.3 percent in December.

The Chinese economy is expected to be the world's only major economy to achieve positive growth in 2020, with the country's GDP hitting 101.59 trillion yuan ($15.68 trillion) in 2020, surpassing the 100 trillion yuan threshold, said the National Bureau of Statistics.

Thanks to the competitive advantages of China's steel prices in the international market and the pickup in overseas demand, China's steel firms registered a third consecutive monthly increase in exports in November, said the Ministry of Industry and Information Technology.

China's steel product consumption is expected to increase by 9.6 percent year-on-year in 2020 to 981 million tons, and by 1 percent to 991 million tons in 2021, which illustrates the strong resilience of the Chinese economy despite the COVID-19 impact and the slump in the global economy, said Li Xinchuang, chief engineer of the China Metallurgical Industry Planning and Research Institute.

According to Qu Xiuli, vice chairwoman of the China Iron and Steel Association, the country's steel sector should further tap the potential of new and high-end products to pursue high-quality development, due to the massive potential for future growth.

She also suggests the industry pay attention to innovation and low-carbon development.