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Iron ore prices soar China issues "questions" to Australian enterprises

Dec 15 ,2020

With China's rising demand, iron ore prices have "skyrocketed", while the decline of Vale supply in Brazil and the disruption of supply caused by the storm in Australia have further boosted iron ore prices.

On December 10, iron ore futures prices on China's Dalian Commodity Exchange soared nearly 10%, breaking through the 1000 yuan (US $152.95) mark per ton for the first time, setting a record high.

Data show that in the first 11 months of this year, China's iron ore import volume was as high as 1.07 billion tons. In China's huge import scale, the impact of iron ore price changes on the cost of Chinese buyers can not be underestimated.

Based on this, Chinese regulators are rapidly regulating misconduct. It is reported that Luo Tiejun, vice president of the China Iron and Steel Industry Association, issued a "question" to BHP Group Limited, an Australian iron ore giant, on the day when iron ore prices hit a record high (on the 10th).

So, in the case of "soaring iron ore prices", will China's purchase of Australian iron ore decline? The answer is No. Ben Wyatt, the finance minister of Western Australia, pointed out that China's demand for Australian iron ore would remain unchanged because the country was already a reliable supplier in terms of product quality alone. In addition, he called for the country's suppliers to act to convince customers that spot iron ore prices operate transparently.

Behind the "questioning" of Australian enterprises by the China Iron and Steel Industry Association also reflects the situation that China relies on overseas iron ore and is unable to control the pricing power.

Some analysts believe that if China wants to get more iron ore pricing power, the current goal is not to completely restrict the purchase of Australian iron ore, but to put China's iron ore sources in "multiple baskets", so as to have stronger bargaining power and anti risk ability.

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