China's Steel Output Declines, Iron Ore Imports Rise

China's Steel Output Declines, Iron Ore Imports Rise

China, the world's largest steel producer, experienced a 2.8% year-on-year decline in steel output in April, reaching 86.63 million metric tons, the lowest April figure since 2018. Concurrently, iron ore imports increased by 8% in the first four months of the year, totaling 418.6 million tons, indicating a potential structural shift in the country's steel industry dynamics.

The reduction in steel production is primarily attributed to ongoing weakness in China's property construction sector and a 9% decrease in steel exports in April compared to the previous year. For the first four months of 2026, steel exports fell by 9.7% to 34.2 million tons. This contrasts with robust iron ore imports, which reached 103.9 million tons in April, slightly lower than March but higher on a daily basis.

The sustained strength in iron ore imports is driven by both temporary and structural factors. Temporary factors include the rebuilding of inventories, with port stockpiles reaching 160.35 million tons by May 22, near record highs. Structurally, China's domestic iron ore output continues to decline, falling 1% in the first four months of the year and 2.8% in 2025, necessitating increased reliance on higher-grade imported ore to meet demand.