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Russell: China's structural shift is reflected in its weak steel production and strong imports of iron ore.

China's?weak production of steel and its robust imports of iron ore continue to contrast, and it is beginning to appear as?a structural change rather than just a temporary disruption.

China, which is responsible for producing just over half the world's total steel, produced 86.63 million metric tons of steel in April. This was a 2.8% decline from the same month of 2025, and the lowest April figure since 2018.

Steel production for the first four month of this year was 331.12 millions tons, down 4.1% on the same period of last year.

According to official statistics, however, iron ore exports increased by 8% during the first four months this year, to 418,6 million tonnes.

Imports of steel-related raw materials in April were 103.9 millions tons. This is down 0.8% compared to March's total of 104.74, but slightly higher per day due to April having one less day than March.

Analysts at DBX Commodities estimate that seaborne arrivals in May will be 104.67 millions tons.

The reason for the low production of steel is easy to understand, given the weakness in the property construction sector and the decline in exports. In April this year, shipments dropped?9% from the same period last year.

Steel exports fell 9.7% in the first quarter of 2026 to 34.2 millions tons.

Iron ore imports are a result of both structural and temporary factors.

BUILD INVENTORIES

SteelHome consultants SteelHome monitor port stockpiles to ensure that they are not contaminated. Holding near record highs

The week ending May 22 saw inventories of 160.35 millions tons, up slightly from the previous week's 160.34 and close to the record-high 165.67million that was reached in the week prior to March 20.

As steel production increases to meet demand, inventories tend to build towards the end of every year. They then peak early in the following year and decline toward the middle.

Stockpiles are up 22% since the July low of 131.05 millions tons, which was 2025's lowest level.

Market participants will be able to tell whether inventories will follow their usual seasonal pattern, and begin to decline as we approach the northern summer. Or if soft steel production will continue to keep them high compared with previous years.

It is possible that the Iran war, and the threat of fuel shortages in Asia due to the continued closure of the Strait?Hormuz by the Iranian regime may have also encouraged Chinese steel mills to import iron ore.

The lack of volatility may also be boosting import sentiment. Singapore Exchange contracts have been locked in a tight band?anchored at $105 per ton over the last 10 months. On Monday, the front-month contract closed at $109.09.

Iron ore imports are driven by the decline of China's domestic iron ore production. This is further exacerbated due to the weakening of the ore grades.

According to MySteel, China's first four months of the year saw an iron ore production of 326.8 millions tons, a 1% decrease from the same period the previous year.

The drop in 2025 was 2.8%, from 1.04 billion tons to 983.7 millions.

China's iron ore is a mixture of 20-30% iron. This means that it must be upgraded in order to match the imported grades, which are 60-65%. The process?is energy-intensive and costly.

Assuming that steel production remains relatively stable, it's likely China's domestic iron ore supply will continue to decrease, which will lead to a greater share of imports.

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These are the views of the columnist, an author for.

(source: Reuters)