Global economy improves iron ore import game is expected to continue

With the gradual improvement of the global economic situation, China's financial investment continues to strengthen, and the trend of increasing demand for steel products will continue to be maintained in the coming years.

In recent years, China’s demand for steel has been increasing and imports of iron ore have increased year after year. Due to the fact that resource endowments are difficult to change, the external dependence of Chinese bulk raw material goods remains high overall. According to China Minmetals Group's statistics, in 2009, the dependence on iron ore was 64%, copper was 80%, nickel was 70%, and lead and bauxite exceeded 50%. In addition, with the advancement of urbanization and new industrialization, as well as the expansion of domestic demand and other initiatives, the Chinese economy has been injected with new vitality and impetus, so that China’s import demand for these bulk raw materials commodities continues to grow.

Imports of iron ore rapidly increase According to the data of the United Nations Commodity Trade Statistics Database, the top five commodities imported by China are integrated circuits, crude oil, iron ore and concentrates, liquid crystal and optical components, and automatic data processing equipment. Through the analysis of the changes in the import value of these five commodities from 2000 to 2009, it can be seen that before 2009, the imports of these types of commodities are increasing, and the growth of crude oil, iron ore, and its concentrates is particularly rapid; Affected by the economic crisis, the import of these types of commodities has declined in 2009, among which crude oil, iron ore and its concentrates have decreased significantly, indicating that it is affected by the economic cycle; automatic data processing equipment has the smallest decline. At present, under the influence of economic stimulus policies of various countries, the global economy is gradually picking up. It can be expected that these commodities will return to or even exceed pre-crisis levels in the coming years.

In the import trend of the top five most important imports, iron ore imports have grown most rapidly, and their performance is most worthy of attention. In 2002, the import of iron ore exceeded 100 million tons. In 2003, imports exceeded Japan for the first time, becoming the world’s largest importer of iron ore; in 2004, the import volume reached 208 million tons, accounting for the total international iron ore shipping trade volume. One-third of the volume, China is therefore known as the "global magnet." By 2007, it had risen to 383 million tons, which was close to 50% of the total international iron ore seaborne trade volume, and more than 90% of the global new iron ore volume was used for consumption in China.

Within a short period of 10 years, the ranking of iron ore imports from China has risen steadily from 20 to 3, and has risen to become China's third-largest import commodity. In terms of proportion, iron ore accounted for only 0.8% of total imports in 2000, and by 2008, its share has reached 5.4%, which has increased several times.

In recent years, the source of imported iron ore is stable. China's iron ore import sources are very stable. The major import countries of iron ore are in order of quantity: Australia, Brazil, India, South Africa, and Peru, and are distributed in Oceania and South America. Judging from the top few countries, Australia has always been China’s largest source of iron ore imports, with the proportion rising from 33% to 40%, while the share of other major countries has declined slightly.

Imports of iron ore are largely influenced by resource endowments and international political and economic relations. On the supply side, Brazil, Australia, India, and South Africa are the major iron ore exporters in the current international market. Among them, the three major mining giants of Brazil's Vale, Australia's BHP Billiton and Rio Tinto accounted for more than 70% of the world's iron ore trade volume. On the demand side, currently the demand side of iron ore in the international market is mainly: China, Europe, the United States, Japan and South Korea. However, the major demand countries that have a significant impact on iron ore prices in the international market are China and Japan. Now China has become the world's largest importer of iron ore. Therefore, combined with the international supply pattern of iron ore, it can be judged that China's iron ore and its concentrate sources will not change greatly in the future.

Import Trends and Forecasts On the one hand, China's achievements in iron ore import trade are significant. Imports of iron ore rocketed by leaps and bounds, rising from 20 in 2000 to third in 2009, becoming the most important imported commodity with the greatest potential for growth. With the gradual improvement of the global economic situation, China’s financial investment continues to strengthen, and the trend of increasing demand for steel products will continue to be maintained in the coming years.

On the other hand, China’s dependence on imported iron ore continues to rise and the structure of the source of imports is unreasonable. In the short term, this situation will be difficult to change. According to the data of the United Nations Commodity Trade Database, China imported 627.87 million tons of iron ore in 2009, an increase of 41.6% from 2008, and the degree of foreign dependence increased from 49.5% in 2008 to 69%. From the perspective of import concentration, although the structure of the import source area has not changed much in the short term, the import is too concentrated in the first few countries and is still deteriorating.

In recent years, the iron ore market situation has been turbulent and new changes are brewing. Taking 2006 data as an example, China imported 32.632 million tons of iron ore in 2006, accounting for 41.1% of the world's iron ore trade volume. From 2000 to 2006, the world's iron ore trade volume increased by 292.23 million tons, China's iron ore imports increased by 256.33 million tons, and 88% of the world's iron ore trade volume increased to China. China’s iron ore imports have remained the No. 1 position in the world, but such a huge market share has not won enough iron ore pricing power for us. Since the economic crisis began in 2008, the economic recovery in the United States, the euro area, and other Asian countries has led to an increase in steel production, which has boosted the demand for iron ore. China is no longer the main force for new iron ore demand. North America and the European Union have a strong growth in crude steel production. Whether China can take a favorable position in the new round of iron ore trade pattern, the situation is not optimistic.