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China's dependence on imported iron ore has decreased to 75%. How can we tighten our grip on resource security?

Time

2021-11-17 21:43

Source:

CNR News Beijing, November 13 (Reporter Lv Hongqiao) According to the Central Radio and Television General Station's Economic Voice "World Finance",Since the beginning of this year, the price of imported iron ore in China has remained high, only recently falling below $100 per ton.At the recently held 10th China Steel Raw Materials Market High-end Forum, experts analyzed thatthe decrease in import demand is the main reason for the drop in iron ore prices. China needs to continue to vigorously develop domestic iron ore to gain pricing power.

Recently, the price of imported iron ore has fluctuated around $90 per ton, a decrease of more than 60% compared to the peak of $233 in May this year. While prices of many other bulk commodities have reached new highs, why has the price of iron ore dropped so sharply? Li Xinchuan, Secretary of the Party Committee and Chief Engineer of the Metallurgical Industry Planning and Research Institute, analyzed at the forum that this is mainly due to the decreasing demand for iron ore in China. Data shows that from January to October, China's iron ore imports decreased by 4.2% year-on-year, with a 14.2% year-on-year decrease in October alone.

LiXinchuan revealed:"This year, from the perspective of the domestic iron ore supply structure, there is a very good trend. In the past, our dependence on foreign sources was over 80%, but from January to September this year, our dependence has dropped to 75%. Although this 5 percentage points is not large, it should be a good trend.An important point this year is that we have shifted from simply controlling production capacity to controlling both capacity and output, which has led to a significant decrease in ore prices."

Although the dependence on foreign sources is decreasing, the structural contradictions in China's iron ore imports remain prominent. Li Xinchuan pointed out that the most significant structural contradiction is that the sources of imports are highly concentrated in a few countries, leading to a passive position in pricing.
Li Xinchuan said: "For example, in 2020, we imported 1.17 billion tons (of iron ore), but where did it come from? Over 80% came from Australia and Brazil, with Australia alone accounting for over 60%, about 700 million tons. This means that the source structure is too concentrated, resulting in unreasonable prices, which is the most prominent issue."
Luo Tiejun, Vice President of the China Iron and Steel Industry Association, said,the current upstream concentration and monopoly pattern of iron ore has not changed, and the pricing mechanism for iron ore has also not changed. The insufficient capacity for iron ore resource security will continue to affect the stable operation and development of China's steel industry for a long time.
Luo Tiejun said: "Only by truly changing the composition of mineral resource sources can we fundamentally solve the problem of resource shortfalls in China's steel industry chain and take control of steel resource security into our own hands. To this end, we need to increase efforts to expand the development of domestic iron ore resources. During the 14th Five-Year Plan period, domestic concentrate can increase from the current 270 million tons to 370 million tons, which can improve the resource security by 6 percentage points."
Jiang Shengcai, Secretary-General of the China Metallurgical Mining Enterprises Association, said that China's iron ore resources are widely distributed, and ten major mining bases have already been formed. From exploration and analysis, there is still great potential for the development and utilization of iron ore resources, but some restrictions need to be overcome.
Jiang Shengcai stated: "For the iron ore mining and selection industry, fixed asset investment increased by 25% from January to September, and private investment increased by 24%. Investment has turned from negative to positive and has rebounded for four consecutive months, but the investment intensity is still at a historical low. Policy constraints and complex licensing procedures are the main factors causing the slow construction of new large-scale mining projects, and the progress of investment follow-up projects and mining technological transformation projects is not ideal, severely affecting the release of domestic mining capacity."

Regarding the problems encountered in domestic iron ore development, the National Development and Reform Commission has recently stated that it will continue to increase support, study the establishment of a departmental coordination mechanism, unblock policy bottlenecks, and continuously enhance China's independent iron ore security capabilities to maintain the safety of the industrial chain and supply chain of China's steel industry.

Source: Intercontinental Casting

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