Posted on 15 Dec 2020
China's steel industry has called on the government to intervene in the iron ore market, pointing to the "failed" market pricing.
In a statement from the China Iron & Steel Association reported by the South China Morning Post, the industry body asked for two of the country's regulators to look at the cause of the price rises, which ended last week at seven-year highs.
“The iron ore market pricing mechanism has failed and steel companies unanimously call on the State Administration for Market Supervision and the China Securities Regulatory Commission to take effective measures … and crack down on possible violations of regulations,” CISA is reported to have said.
BHP is also reported to have met with CISA on Thursday to discuss the industry group's concerns about pricing, which CISA said included a "candid exchange of views".
The price of iron ore climbed $US3.55 to $US160.13 per tonne at the end of last week, according to Metal Bulletin, leaving the steel-making ingredient higher than it's been in more than seven years.
Investors and exporters remain on edge as the breadth of economic penalties on Australian goods sold into China expands amid political tensions between the two countries.
But iron ore is viewed as impervious to the intergovernmental fracas because of the lack of alternative sources of supply.
And with the outlook for supply from China's second-largest source, South America, sliding after Brazil's Vale lowered its production estimates, prices have continued to rise off the back of demand from China.
"Year to November Chinese imports of iron ore are 1.073 billion tonnes -about 100 million tonnes more than the average over the same period in 2019 and 2018," Westpac's Robert Rennie said.
"Simple supply and demand mechanics would tell you that if the demand for a commodity from China has risen by 100mt, while supply from the key providers is unchanged, price simply has to rise. And rise it certainly has."
Source:Financial Review
