China's iron ore buying may fool you

Don’t be fooled into thinking China’s surging iron ore imports are a proxy for the health of demand in the biggest user. They’re masking an industry in trouble, according to the analyst who accurately forecast the price slump below $40 a tonne. "It’s totally wrong to just look at the China import number to measure demand strength — a lot of people were talking about that, I saw — that’s a market mistake," said Andy Xie, an independent economist who predicted in Feb prices would sink into the $30s this year.

"There’s no aggregate increase in demand even if China is importing more because it’s just translating" into steel exports, he said. Data on Tuesday showed China’s iron ore imports rose 22% last month and annual purchases may overtake last year’s record 933 million tonnes.