Ore is an important raw material for smelting various metal and chemical products.
For example, iron ore is the raw material for producing steel and iron; manganese ore is not only one of the auxiliary materials for making steel, but also can produce manganese carbonate and anhydrous manganese oxide for further production into other chemical products; copper ore can be smelted into copper, processed into copper products and used in various fields of our production and life.
Among them, iron ore, as a raw material for smelting steel, plays a significant role in China's economic development and social progress, and has made significant contributions to the construction of China's infrastructure projects, the progress of the real estate industry, and the innovation of urban appearance. The smelting of iron and steel continues to provide blood for the rapid development of China's economy.
Data source: China National Bureau of Statistics Express
However, although China's iron ore reserves are among the highest in the world, the ore produced locally is relatively low quality and grade. This increases the cost of the smelting process, and at the same time, creates more waste residue, waste material, and waste gas, which is even more unfavorable for the development of environmental protection. Therefore, more iron ore for China's iron and steel smelting comes from imports.
At the beginning of this century, with the rapid growth of China's domestic economy and the development of China's domestic infrastructure construction, China's demand for steel rose rapidly. Still, self-produced steel cannot meet the market, and imported iron ore is also a better choice in terms of the cost of further processing.
In 2002, China imported more than 100 million tons of iron ore, and in the second year, it surpassed Japan to become the world's largest importer of iron ore. In the following years, the amount of iron ore imported by China was ranked first in the world. Under China's real estate boom, iron ore imports have been increasing yearly, reaching a scale of 630 million tons in 2009. During this period, the price of imported iron ore has also increased year by year with the increase in import volume. Although it fell in 2008 due to the impact of the subprime mortgage crisis, the overall price increase trend remains unchanged.
Source: UN Comtrade | Iron ore under HS code 2601
Facing the world's largest iron ore producers: Vale, Rio Tinto, Fortescue Metals Group, and BHP Billiton's monopoly structure, Chinese iron and steel company Baowu Group allied with steelmaking companies in Japan, South Korea, Germany, the United Kingdom, and France, in the hope to jointly deal with the situation of import monopoly. Many private steelmaking enterprises in China mainly import raw iron ore materials from India, South Africa, and Venezuela to open import channels.
From 2003 to now, China's iron ore imports have been ranked first in the world. Under such a trade model, there is a contradiction between the vast trade scale and the weak market power. With the advent of the new normal economic situation and the impact of the COVID-19, China's economic growth has slowed, and many industries are facing structural adjustment problems. Steelmaking enterprises, which are traditional industries, are no exception.
Coupled with the impact of uncertain factors such as trade wars and geopolitics, the overall development of the steel industry is facing new challenges. Grasping the rules of price changes in the iron ore and steel markets, exploring the importance of a country's discourse power in the international market, and improving China's trade negotiation power have become urgent problems that China has to solve.
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