According to Chinese customs authorities, iron ore imports for October came in at 92 MMT, down 14% YOY, taking the YTD total to 934 MMT, which is down 4% compared to the first ten months of 2020. The YTD import growth was +6.0% by May, while the five months since has been -13% below the same period last year. Domestic production continues at elevated levels, with October coming in at 80 MMT, up 2% on October 2020 while 10% above the October average of the last three years.
Slower iron ore imports feeds into slower steel production. October was 71 MMT, down 23% YOY, taking the YTD total to 877 MMT, flat YOY. Chinese steel production growth peaked in April with a +17% YOY increase. Pig iron production was 63 MMT in October, down 13% YOY, taking the YTD production levels to 734 MMT, down 1% YOY. Pig iron accounts for 84% of the total steel production YTD, down from 85% in the same period in 2020 while in line with the five-year average.
For the dry bulk supply and demand, slower import growth of iron ore is partially compensated by strong coal imports. The October statistics indicate 27 MMT imported, nearly double the import in October 2020, taking the import growth for the last three months to +65%.

Going forward, economic stimulus in China should support dry bulk demand. Financial regulators recently told Chinese exchanges that “high quality” property developers can issue new asset-backed securities to refinance maturing debt. No developers have sold asset-backed securities since August, when authorities started restricting approvals to limit the ramifications of Evergrande’s financial distress. Also, rules regarding interbank bond lending will be relaxed going forward, measures that are likely to free up liquidity and aid the Chinese housing market, ultimately supporting dry bulk freight rates.
The FFA for 2022 currently stands at USD22.4k/day. While this remains below the early-October level of USD29.2k/day, it is up 18% since the start of last week and compares to our estimate of USD24.3k/day.