China’s iron ore production is forecast to decline by 3% to 78.2 Mt in 2020 due to the impact of Covid-19. Between January and February 2020, the operating rates at private iron ore mines declined from 34.9% to 29.6% and overall, China’s iron ore production declined by 4.6% year-on-year, says GlobalData, a leading data and analytics company.
Several mines and plants had to temporarily cease the production activities. The deliveries and shipments were either delayed or rescheduled, and there was a shortage of workers, who could not return to mine sites owing to the prolonged Lunar new year holidays, followed by the transportation issues due to lockdown.
Vinneth Bajaj, Senior Mining Analyst at GlobalData, says: ‘As a result of the slowdown in the domestic production, iron ore imports grew by 1.5% year-on-year in January and February 2020 to reach 176.8 Mt. However, purchases accumulated at ports due to transportation challenges, owing to the lockdown and inventory at ports had reached a three-month high of 131.1 Mt by 7 February 2020.’
GlobalData forecasts the iron ore production in China to grow at a compound annual growth rate (CAGR) of 1.1% between 2020 and 2024 to reach 81.6 Mt.
Bajaj concludes: ‘The growth will be relatively flat due to the elimination of inefficient steel capacity, as part of the three-year ‘Blue Sky’ environmental initiative, which runs from 2018 to 2020. This initiative is driving domestic steelmakers to utilize high-grade iron ore (Fe 58-62%), which principally originates from Australia and Brazil.’
Source: GlobalData
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