High-Grade Iron Ore Will Continue to Rally
China’s economy has been optimized in both growth and structure guided by the five development concepts of innovation, coordination, greening, opening up and inclusiveness, according to economists.
The “Greening” part is driving high-grade Iron Ore prices and will continue to do so in the future.
The rapidly increasing demand for high-grade iron ore has pushed the market share of top suppliers Australia and Brazil to more than 80 percent of China’s total iron ore imports, forcing shippers of lower grade material to offer steeper discounts to draw buyers.
Iron ore with 62 percent iron content traded at $76.56 a tonne on Wednesday, a premium of $29.75 over ore with 58 percent iron content, according to prices published by Metal Bulletin.
Steel output in China, the world’s largest consumer and producer, surged to a record 74.59 million tonnes in August, trumping the previous all-time monthly high in July.
A Government led infrastructure push has helped boost Chinese steel demand this year, and that demand is also for high-grade iron ore, lifting construction steel prices by more than half and fattening producer margins. As authorities shut makers of lower quality steel, those left standing increased output to chase rising prices.
After decades of rapid expansion brought smog and contaminated soil, China is swiftly and steadily shifting from GDP obsession to a balanced growth philosophy that puts more emphasis on the environment.
More energy has been channeled into cleaning up the economy, which had long been powered by polluting heavy industries. Stricter rules were imposed on both factories and officials, and violations received tougher penalties.
The Ministry of Environmental Protection on Monday announced a new round of inspections on local environmental protection efforts covering eight provincial-level areas, the latest in its nationwide campaign to curb pollution.
During last year’s inspections, almost 6,500 officials were held accountable for negligence or malpractice.
Ecological development has become a major task in the country’s overall plan and has been reiterated in key official documents and high-level meetings in recent years.
Measures have been rolled out to control pollution and set the direction for a green path. The harshest-ever environmental protection law was passed, and a “river chief” system was introduced to purify the water. The government decided to draw “red lines” in certain regions to strengthen protection.
The effort has paid off. The average annual density of fine air particulate matter, or PM 2.5, often used as a gauge for air pollution, dropped by 33 percent in 2016 in the Beijing-Hebei-Tianjin region compared with 2013. Water and soil conditions also improved.
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