ALTHOUGH owners’ earnings have been hit by overcapacity and a dearth of cargoes in 2016, demand for iron ore in China seems to be growing significantly. Chinese annual iron ore imports are certain to reach as high as 1.1bn tonnes in 2016 marking a year-on-year trade growth of 6% as compared to 953.37m tonnes in 2015.

Banchero Costa data revealed that total imports by China in the first eleven months stood at 935.8m tonnes as it tapped cheaper, higher quality iron ore from Australia and Brazil.

According to Arrow Research, China which imports almost two-thirds of the world’s iron ore supplies is expected to push past the billion tonne mark in 2016.

Chinese Customs data show that November imports reached 91.97m tonnes which is China’s third higher monthly volume in history.

“If the past is anything to go by and December imports outshine November’s, China total iron ore imports through 2016 could push to as much as 1.1 billion tonnes,” Arrow Research said.

Banchero Costa head of research Ralph Leszczynski also had similar views and said that, “I think it’s almost certain that the total for the year exceeded one billion tonnes, as it looks impossible that the volume in December could have been below 65m tonnes. My guess is that the figure for December should be about 90m tonnes, which would give a total of 1.02bn tonnes in 2016,” Mr Leszczynski added.

However, stockpiled iron ore across 41 major Chinese ports amounted to more than 111m tonnes by the end of 2016, nearly 18m tonnes more than at the close of 2015. “Such a voluminous accumulated inventory could see China pull back slightly on iron ore import volumes through the first quarter of 2017, but this would mark no deviation from past years,” Arrow Research said.

Meanwhile, Vale’s endeavour to build its inventory base in Malaysia and a distribution centre in China to increase its share of iron ore trade into China is likely to improve tonne-miles as shipments will increase between Brazil and Malaysia and Malaysia and China.