Reuters reported that China's iron ore imports surged to a record high in July as domestic buyers replenished their inventories to meet surprisingly resilient steel demand during the summer.

Customs data showed that imports of iron ore jumped to 73.14 million tonnes up 17% from 4 month low of 62.3 million tonnes in June.

Analysts were surprised by the extent of the climb, especially after export figures from Australia's Port Hedland showed a slight decline over the month.

Mr Graeme Train analyst with Macquarie in Shanghai said that "It's really big shipments from Australia weren't actually that good and I would think it has something to do with the fact that the June number was low and there was some catch-up tonnage coming through. But the data also reflected healthy underlying demand in the Chinese steel sector, by far the world's biggest despite persistent complaints about oversupply and weak prices.”

Mr Train said that "The steel market looks really healthy demand has clearly beaten everyone's expectations. The consensus is that there will be a slowdown in the second half but we are seeing steel destocking continuing so there are no obvious signs the market is out of balance at this stage and any slowdown will be a lot more moderate than people expect."

Chinese steel mills maintained strong run rates as their orderbooks improved, boosting appetite for iron ore and driving up spot prices of the raw material IO62-CNI=SI by 12 percent to above USD 130 per tonne last month.

Mr Judy Zhu analyst with Standard Chartered Bank in Shanghai said that "Chinese steel mill margins have improved in July so they have ramped up production, boosting appetite for the raw material. Zhu expected the average iron ore prices to stand at USD 127 per tonne in the Q4.