As a superpower, China occupies a good chunk of the modern world. That being the case it is not shocking that they have placed a large demand on the iron ore industry. For the past decade China has put a huge demand on iron ore, and annual growth has averaged about 15%. China has produced more than half the steel in the world over the last ten years, but construction demand will slow down this year.
The iron ore price on today's market will actually rely heavily on China's steel demand. For many years, China has been the commodity earner for several different mining companies including Vale of Brazil, BHP Billiton, and Rio Tinto. Last year, China alone actually managed to account for 60% of global trade, and the fluctuations in the market this year have affected the profits of top steel fabricators. These steelmakers of course include ArcelorMittal, Nippon Steel, and ThyssenKrupp.
When the market hit the record slowdown, many executives attributed it to the Chinese New Year. When the festivities ended however, the Chinese steel mills were seen to produce just 1.7m tonnes per day. Chinese steel mills, accordin to CISA data, were producing 2m tonnes at the end of June. While it might not appear to be of consequence, there was indeed an effect on world economy.
It is commonly believed that the shortages mentioned will only affect the steel industry. Believe it or not, it will also hurt steel suppliers commodities. A great example would be coking coal. At the moment, Chinese ports are accepting no further shipments simply because they have no more storage capacity. This is simply not good for the world economy.
While these downturns have created problems, the prices are still rising ever so slightly. While the price per ton was $134 earlier this year, it now sits at $143. Supplies from India might have something to do with it, but price manipulation has also been blamed. There is a chance that traders are attempting to keep the prices high simply so that they can profit from selling their stockpiles. If that were true, then prices will drop shortly once the materials are sold off for steel fabrication.
The future is uncertain at the moment, but analysts believe iron ore prices will rise considerably more by the end of the year. It will however continue to fall before this happens. For many it is hard to believe that one country's demand can affect the entire world, but when you are dealing with a country that takes up as much real estate as China, repercussions are to be expected. This however is not a reason to despair. More than likely, the steel fabrication and ore industries will return to normal. Keep watching and see what happens!
The iron ore price on today's market will actually rely heavily on China's steel demand. For many years, China has been the commodity earner for several different mining companies including Vale of Brazil, BHP Billiton, and Rio Tinto. Last year, China alone actually managed to account for 60% of global trade, and the fluctuations in the market this year have affected the profits of top steel fabricators. These steelmakers of course include ArcelorMittal, Nippon Steel, and ThyssenKrupp.
When the market hit the record slowdown, many executives attributed it to the Chinese New Year. When the festivities ended however, the Chinese steel mills were seen to produce just 1.7m tonnes per day. Chinese steel mills, accordin to CISA data, were producing 2m tonnes at the end of June. While it might not appear to be of consequence, there was indeed an effect on world economy.
It is commonly believed that the shortages mentioned will only affect the steel industry. Believe it or not, it will also hurt steel suppliers commodities. A great example would be coking coal. At the moment, Chinese ports are accepting no further shipments simply because they have no more storage capacity. This is simply not good for the world economy.
While these downturns have created problems, the prices are still rising ever so slightly. While the price per ton was $134 earlier this year, it now sits at $143. Supplies from India might have something to do with it, but price manipulation has also been blamed. There is a chance that traders are attempting to keep the prices high simply so that they can profit from selling their stockpiles. If that were true, then prices will drop shortly once the materials are sold off for steel fabrication.
The future is uncertain at the moment, but analysts believe iron ore prices will rise considerably more by the end of the year. It will however continue to fall before this happens. For many it is hard to believe that one country's demand can affect the entire world, but when you are dealing with a country that takes up as much real estate as China, repercussions are to be expected. This however is not a reason to despair. More than likely, the steel fabrication and ore industries will return to normal. Keep watching and see what happens!
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