As coal, natural gas and other commodities have risen in price, iron ore has "entered into the cold winter" ahead of schedule. On September 20, the price of iron ore futures in Singapore plunged 12% to US$90 per ton, a 15-month low.
This makes Australia very distressed. Since last year, Australia has repeatedly stood at the forefront of anti-China, but found that exports of coal and barley to China have been frequently blocked. However, iron ore, which has fewer alternatives internationally, has been regarded by Australia as an "iron rice bowl" and continues to clamor for it. Emboldened". Especially when the price of iron ore soared at the end of last year, Australia was more "assured", and many Australian media even claimed to "weaponize" iron ore in order to counter China on trade issues.
Today, as China's steel production reduction work continues, iron ore demand continues to weaken, and iron ore prices continue to fall, casting a shadow over Australia's economic recovery under the epidemic. Some analysts have pointed out that the Australian economic recession may continue until the first quarter of 2022. "The true face of the Australian economy will be unveiled, and the results will not look good."
Seeing that the former "arms of trade with China" has now become a "chess piece" of China, the anti-China organization "Australian Institute for Strategic Policy" (ASPI) "made suggestions" on September 22 to "find a way out" for Australian iron ore.
To save Australia’s iron ore, start with coal?
ASPI proposed that Australia's "best and only defense" is to appeal China's so-called "stop importing coal from Australia" to the World Trade Organization (WTO).
"Australia must choose to fight, and the government has sufficient grounds to lodge a complaint against coal," the report declared, "(Chinese government policy) does not involve formal tariffs, but pure discrimination against a single supplier." ASPI believes that if the lawsuit is successful , This will become a precedent for solving "iron ore discrimination". But before this, Australia had already sued China to the WTO on import tariffs on barley and wine.
As for the forecast of future iron ore prices, ASPI is optimistic.
On the one hand, the agency believes that due to Brazil’s difficulty in increasing production in the short term and Guinea’s minerals do not have rail access to ports, the continued shortage of international iron ore supplies will stabilize their prices. Even if Brazil increases production in the future, Africa can successfully export large quantities of iron ore, and the price per ton will fall to US$50 to US$70. Australian iron ore companies still have money to make because the latter’s production costs are relatively small. At present, Australia is China's top iron ore supplier. According to the statistics of Westpac Bank of Australia, Australia's iron ore accounts for 60% of China's total imports, far exceeding the second-ranked Brazil (20%).
On the other hand, this anti-China organization that has been concocting "fake news" on Xinjiang-related issues all the year round is now slandering the Chinese economy and replenishing "China's economy will continue to decline." After that, the Chinese government will focus on developing infrastructure to stimulate the economy, which will then benefit. Iron ore.
"Australia's economic recession may continue until the first quarter of 2022"
In fact, it is Australia itself that really has to face the problem of "the economy will continue to decline."
Previously, Australia, the world's largest iron ore producer, struggled to recover its economy under the epidemic by relying on its “iron rice bowl”. The country’s total iron ore exports from 2020 to 2021 are expected to reach 136 billion Australian dollars, setting a new historical record. The outstanding performance of strategic resources such as iron ore made up for the country’s declining service export end. Australia’s GDP in the first quarter of this year increased by 1.1% year-on-year, barely returning to the pre-epidemic level.
However, since May of last year, the price of iron ore once hit a record of US$230/ton, but this week’s price has been "halved" to below US$100/ton. On September 20, Singapore's iron ore futures fell more than 11% in intraday trading, hitting US$90/ton, a record low since May 2020. On the same day, the Australian stock market opened lower and lowered. The S&P/ASX 200 index fell 2.3%, the lowest level since July 20. Mining stocks led the decline. Champion Iron plunged 14.3%, Lynas fell 11.8%, and Orocobre fell 8.7%.
This has seriously affected Australia's enthusiasm for economic recovery.
The Guardian wrote an article a month ago that the export of ore is currently one of the few industries that supports Australia's economic recovery. "Australia's iron ore exports have faded, which is the last thing the country's economy needs."
"Compared with other places, this (the plunge in iron ore prices) has the greatest negative impact on Australia. Our economic recession may continue until the first quarter of 2022." Bennett, chief economist of ACY Securities, Australia, accepted Australia on the 21st. News.net said in an interview: "Our largest trading partner is gradually reducing the purchase of Australian iron ore, and we are alienating this trading partner. As the price of iron ore is cut in half, the true face of the Australian economy will be unveiled. , The result will not look good."
Both steel production reduction and energy consumption control, China has its own rhythm
Bennett's "our largest trading partner" refers to China. In recent years, some Australian politicians have been fighting to be the "anti-China vanguard", repeatedly testing the red line, hysteria with China, and treating China's reasonable trade policy as "hostile means."
However, as a major factor in the current round of iron ore prices plummeting, China's steel production and demand reduction obviously have another consideration.
During the "14th Five-Year Plan" period, with the 2030 carbon peak target and the 2060 carbon neutral target proposed, the energy "dual control" target will continue to be an important driving force for my country's low-carbon development. The "14th Five-Year" plan requires that energy consumption per unit of GDP will be reduced by 13.5% by 2025. In January 2021, the Ministry of Industry and Information Technology emphasized the goal of "resolutely compressing crude steel output and ensuring a year-on-year decline in crude steel output in 2021." In early August, the daily crude steel output of my country's key statistical iron and steel enterprises achieved both year-on-year and month-on-month declines.
The timing of the reduction in crude steel production needs attention. Wang Jing, a researcher at the Lange Iron and Steel Research Center, stated that the national crude steel output in the first half of this year was 563 million tons, an increase of 11.8% year-on-year. In 2020, the national crude steel output was 1.065 billion tons. Crude steel output needs to be controlled at 502 million tons, a decrease of 61 million tons from the first half of the year.
At the same time, the policy of "dual energy consumption control" has been frequently introduced in various places.
On August 12, the National Development and Reform Commission issued the "Barometer of Completion of Energy Consumption Dual Control Targets in Various Regions in the First Half of 2021". The table shows that less than half of the provinces (regions) are currently progressing smoothly in reducing energy intensity. However, in terms of total energy consumption control, there are still eight provinces with first-level early warning (the situation is very severe). Recently, many places have introduced hard measures to ensure the completion of the annual energy consumption double control target.
For example, from September 8th to 30th, Jiangsu Province launched a special energy-saving monitoring action for enterprises with an annual comprehensive energy consumption of more than 50,000 tons; Yunnan Province will further consolidate the city’s responsibility for implementing dual control goals and establish a daily monitoring, analysis, and reporting system; Inner Mongolia recently launched a "look back" work on the clean-up and rectification of the "two highs" illegal projects.
In response to climate change, China's actions are resolute and proactive. On September 22, China announced that it would no longer build new overseas coal power projects, further fulfilling its promise. On the other hand, Australia has been criticized by many countries for its passive response to climate change all the year round. Instead, it is playing economic and trade calculations on environmental protection issues and indulging in a zero-sum geopolitical game. The irony is that on September 22, the United Nations "High-level Advocate for Climate Action" Nigel Tope rarely criticized Australia by name: Australia will be isolated by the world without a clear emission reduction target, which will be detrimental to the Australian economy.
Learn more about FRP panel, sandwich panel and skylight sheet, please view the links below and contact our sale engineer NOW:
Contact:
Charles
Mob/whatsapp/WeChat: 0086 186 3331 5286
Email: sales05@frpexpert.com