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China's 2023 iron ore imports seen unchanged as demand falters - industry sources

Kitco News

* Iron ore purchases in 2023 seen around last year's 1.11 bln T

* Lack of growth in property sector to cap demand

By Naveen Thukral and Muyu Xu

SINGAPORE, May 24 (Reuters) - China is likely to import a similar amount of iron ore this year as it did in 2022, with demand in the world's biggest steel producer failing to show signs of recovery, according to participants at an industry conference. Iron ore imports over January-April jumped more than 8% as mills boosted purchases in anticipation of higher demand after China abandoned its pandemic restrictions.

However, a lack of growth in the property sector, the top consumer, is likely to take a toll on purchases, miners and traders said on Wednesday. "With all the investment the government put into infrastructure and all the stimulus the government gave to the economy post COVID-19, a lot of people thought demand will just take off but it has not been as good as people expected," said a senior executive at one the top global mining companies.

Benchmark Singapore and Dalian iron ore futures extended losses on Wednesday, languishing below $100 a tonne, as steel prices slumped in China. "For the property sector, in the first few months of 2023, we saw some announcements of new projects but it seems they are dying down," said one Shanghai-based iron ore trader. "Government data shows new construction projects are not really growing, and the market is still digesting the huge inventory." Miners and traders declined to be named as they are not authorised to speak to media. China's property sector accounts for 35%-40% of the country's total steel demand and a quarter of GDP. Investment in the property market declined 6.2% year-on-year in the first four months of the year, while new construction starts measured by floor area, an indicator widely used to monitor steel demand, contracted 21.2%. China, which accounts for 70% of global seaborne iron ore purchases, bought 1.11 billion tonnes in 2022, down 1.5% from the previous year. Although there is no official notice of steel production cuts, the market consensus is that 2023 output will not be higher than 2022, a Beijing-based trader said. "It makes sense that the government is not saying anything at this moment as they want steel mills to run normally to support the economy," he said.

"But if margins turn negative later this year...iron ore demand will sooner-or-later take the hit." (Reporting by Naveen Thukral an Muyu Xu in Singapore; additional reporting by Amy Lv in Beijing; Editing by Kirsten Donovan)

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