(Repeats earlier story for wider readership with no change to text. The opinions expressed here are those of the author, a columnist for Reuters.)
LAUNCESTON, Australia, Aug 18 (Reuters) - Iron ore is a market where the short-term outlook is markedly more bearish than the longer-term view, which may fuel volatility in the price of the steel raw material.
Both the short- and longer-term prospects for iron ore are driven by China, the world's biggest steel producer and buyer of about 70% of global seaborne iron ore.
The problem surrounding China currently is that it's possible to be both optimistic and pessimistic over the outlook for the world's number two economy, depending on the time frame chosen.
BHP Group Chief Executive Officer Mike Henry is one of those who tends to focus on the longer-term picture, telling a results briefing on Aug. 16 that the world's biggest mining company remains positive on China.
"We expect China to emerge as a source of stability for commodity demand in the year ahead, with policy support progressively taking hold," he said.
For Henry's optimism to be justified several things have to happen, including successful and timely stimulus efforts by Beijing, limited COVID-19 lockdowns across China and a short and shallow global slowdown that limits the extent of monetary tightening.
All of these are indeed possible, but the point is they are far from guaranteed.
However, in the real world of physical commodity flows the evidence is somewhat mixed.
China is expected to import around 100 million tonnes from the seaborne market in August, according to vessel and port data.
Refinitiv has August imports pegged at 99.7 million tonnes, while commodity analyst Kpler is slightly more optimistic at 101.3 million.
If these figures are borne out by China customs data, it would represent an increase on the official figure of 91.24 million tonnes for July.
But, customs data show that in the first seven months of 2022 China's iron ore arrivals were 626.8 million tonnes, which is down 3.4% on the same period last year.
The decline fits in with the picture being presented by China's steel production, which dropped 6.4% in July compared to the same month in 2021, taking the retreat for the first seven months of the year to a matching 6.4%.
Steel output may come under further pressure in the short term as China grapples with a heatwave, which has caused power shortages and forced authorities to introduce rationing.
Nearly 20 steel mills in China's southwest regions had suspended operations as of Wednesday, according to steel industry data provider SMM.
While the power crisis may be short-lived, it's likely to curb some iron ore demand, which may add to further inventory builds.
Stockpiles at Chinese ports rose to 138.6 million tonnes in the week to Aug. 12, a three-month high and up from the low so far in 2022 of 124.4 million in the week to June 24.
Questions over steel production, rising inventories and still soft economic numbers are making it hard to justify strong iron ore prices.
The spot price for benchmark 62% ore delivered to north China, as assessed by commodity price reporting agency Argus, slipped to $100 a tonne on Wednesday, a three-week low and down from the most recent high of $120.05 on July 28.
In some ways the iron ore market is caught between the reality of weak steel output, soft economic data, high energy costs and rising inventories, and the expectation that all of these bearish factors will fade amid a rebound in demand in the rest of 2022 and into 2023.
But it's likely that keeping iron ore above $100 a tonne will require some actual evidence that the bullish narrative is starting to kick in.
(Editing by Christian Schmollinger)