China’s Iron Ore Giant: Prices Too High
China’s state-backed iron ore giant, China Baowu Steel Group, has declared that current iron ore prices are too high. The company’s chairman, Chen Derong, has stated that the current prices are unsustainable and that the market should be more rational.
China’s Iron Ore Demand
China is the world’s largest consumer of iron ore, accounting for more than 70% of global seaborne iron ore demand. The country’s demand for iron ore has been increasing in recent years, driven by the country’s infrastructure and real estate construction.
Iron Ore Prices
Iron ore prices have been on the rise since the start of 2020, driven by strong demand from China. Prices have risen more than 80% since the start of the year, reaching a record high of $173.60 per tonne in October.
China Baowu Steel Group
China Baowu Steel Group is the world’s largest steelmaker and the largest iron ore consumer in China. The company is owned by the Chinese government and is the largest steel producer in the world.
Chen Derong’s Statement
Chen Derong, the chairman of China Baowu Steel Group, has stated that the current iron ore prices are too high and that the market should be more rational. He believes that the current prices are unsustainable and that the market should adjust accordingly.
China’s Iron Ore Imports
China’s iron ore imports have been increasing in recent years, driven by the country’s strong demand for steel. In October, China imported a record high of 106.3 million tonnes of iron ore, up from 97.3 million tonnes in September.
Iron Ore Supply
The global iron ore supply has been tight in recent months, due to production disruptions in Brazil and Australia. Brazil, the world’s second-largest iron ore producer, has been hit by a series of production disruptions due to the coronavirus pandemic.
China’s Iron Ore Reserves
China’s iron ore reserves are relatively low compared to other countries. The country’s iron ore reserves are estimated to be around 1.2 billion tonnes, compared to Australia’s estimated reserves of 8.2 billion tonnes.
Outlook
It remains to be seen how the market will adjust to China Baowu Steel Group’s statement. The company’s statement could lead to a correction in iron ore prices, as the market adjusts to the new reality. However, it is likely that the market will remain volatile in the near future, as the global iron ore supply remains tight.