160.9 million tons of iron ore is stockpiled at Chinese ports, which is 900,000 tons (1%) more than a week ago, up year-on-year by 13.4 million tons (9%), and just 100,000 tons below their all-time high of 161 million tons reached on April 6, 2018. Stockpiles have increased during seventeen of the last eighteen weeks.

Stockpiles are receiving great attention, but not being talked about is that they are still 80 million tons below capacity (capacity at China’s major ports is 241.8 million tons). China’s robust iron ore port stockpiles on their own do not concern us. They are never a headwind. With China, we continue to see strong iron ore import demand (as iron ore cargoes are of much higher quality than what is mined domestically in China) and trade volume that will remain dependent on the exporters and cargo availability. If iron ore exporters want to continue selling, China is poised to continue buying, especially if prices continue to decline. Buyers will happily shun much higher priced iron ore already stockpiled at Chinese ports in favor of new export cargoes at lower prices. Overall, Chinese iron ore import demand can easily surge even when China’s steel output is falling and/or if port stockpiles are extremely high. It has long remained global iron ore exporters that drive China’s iron ore import volume. Spot iron ore prices just have to remain high enough for global iron ore exporters.
Source: By Jeffrey Landsberg, Managing Director, Commodore Research & Consultancy (http://www.commodore-research.com/)