CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
The import price of 62% Fe content ore at the port of Tianjin jumped 3% to $57.40 per dry metric tonne on Tuesday according to data supplied by The Steel Index after Chinese iron ore miners asked for an investigation into Brazilian and Australian producers flooding the market.
The move is also seen as retaliation against the US imposing huge anti-dumping tariffs on Chinese steel exports since May
Reuters reports that more than 20 miners in a statement published on the Metallurgical Miners’ Association of China website asked for an investigation into top producers of the steelmaking raw material including Brazil’s Vale and Australia’s Rio Tinto and BHP Billiton.
Australia is forecast to increase its global market share from 54% in 2015 to 58% in 2017, while Brazil’s share is forecast to increase from 26% in 2015 to 28% in 2017 according to Australian government figures. At the current rate could top the 1 billion tonnes per year mark in 2016 for the first time.
Hundreds of domestic Chinese miners struggling with low grade and high costs have been forced to halt operations according to the association:
“The capacity of major iron ore miners has continued to grow and requires a massive Chinese market to absorb their great excess,” the statement posted on Tuesday said.
“Vale, Rio Tinto and BHP Billiton which have dominated global iron ore trade have defied the market and are still expanding despite prices being low since their strategy is to use low-priced dumping to crowd out higher-cost miners,” the association said.
After more than halving since 2011 to less than 200m tonnes, Chinese iron ore output on a 62% Fe basis is forecast to fall by a another 12% in 2016 and by a further 20% in 2017.
The statement also mentions China’s “security of steel production” and the move is also seen as retaliation against the US imposing huge anti-dumping tariffs on Chinese steel exports since May. China forges almost half the world’s steel and consume three-quarters of the seaborne trade in iron ore.
The price of iron ore is down sharply since trading just short of the $70 mark in mid-April but year to date the price is up by a third and has surged 55% since hitting near-decade lows in December. Year to date iron ore is averaging $52.20 (the price averaged $55 last year) and volatility has reduced markedly since Beijing’s clampdown on speculation on futures markets inside the country.
Comments
Mark
We have all heard of the estimated FOB costs of high grade iron ore from the major suppliers and know that there are royalties (tax) payable. “dumping” is rare these days unless the investigators are “instructed” to find the producer “guilty” then dumping duties are applied using some questionable calculations. The governments that pursue the legal term of dumping should be more upfront and use the word “protectionism” as this is, in reality, more correct. Primary mining products are easy to calculate, manufactured goods is a whole different ballgame – selective data methods are, in many cases, just creative accounting. Iron ore supply is just one of the very rare items that China cannot compete with it’s major suppliers….