Forging more than half the world's steel, Chinese imports of iron ore for the full year 2016 topped one billion tonnes for the first time. The 1.024 billion tonnes constitute a 7.5% increase over the annual total in 2015 and is indicative to what extent exporters from Brazil and Australia has been able to displace domestic producers struggling with low grades and high costs.
The total value of cargoes climbed to just under $58 billion, with the average import price over the course of 2016 at $56.50 per tonne. The all-time record in terms of dollar value was set in January 2014, when the country imported $111.3 billion worth of iron ore back when prices were firmly in triple digit territory.
Iron-ore prices have not quite broken out to new recovery highs but have sustained last year’s breakout from a well-defined base formation and the upside can be given the benefit of the doubt provided that remains the case.
The UK listed Blackrock World Mining Trust, which is heavily skewed towards iron-ore producers, remains on a steady upward trajectory. It is rallying from what were, in early 2016, some of the most depressed levels seen in over a decade. A break in the progression of higher reaction lows would be required to question the consistency of the advance.
The US listed VanEck Vectors Steel ETF invests in both iron-ore miners and steel producers. It also remains on a recovery trajectory and found support three weeks ago following an equal sized reaction.