The volume of imported iron ore to China rose by 2.4 per cent over the first quarter of the year compared to 2014, in a sign that foreign miners are stealing market share from their higher cost domestic rivals.
Figures released by the Customs Bureau on Monday showed China imported 227.1 million tonnes of iron ore in the first quarter, but the average price was 45 per cent lower.
The surprisingly strong iron ore import volumes indicate Chinese steel mills are looking to buy higher quality foreign iron ore as the price falls.
While volumes were slightly higher than the first quarter of 2014, the rate growth has slowed substantially.
Between the first quarter of 2013 and 2014 import volumes grew by nearly 20 per cent, but growth in the latest quarter was just 2.4 per cent or a rise of 5.4 million tonnes.
This suggests that China's imported iron ore volumes may be nearing their peak.
Analysts are predicting China's overall demand for iron ore will fall by 5 per cent and 10 per cent this year.
The price of the key steel making commodity has more than halved over the last 12 months to $US47 a tonne.
While Australia's federal budget has been hit hard by the price fall, prominent economist Ross Garnaut said the increase in iron ore exports to China was the only factor keeping the economy out of recession.
China's iron ore imports were flat in the first two months of the year, compared to 2014.
The falling demand from China could push the price as low as $US35 a tonne according to Treasurer Joe Hockey and may also force large production cuts from the Australian miners.
China's overall trade during the first quarter fell by 6 per cent compared to last year.
China's March imports fell by 12.7 per cent from a year earlier, while exports were down 15 per cent.
Source: Financial Review
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