Demand for iron ore pellets and high-quality ore from China is expected to grow in 2020 as the government looks to move steel mills to coastal regions from inland to fight pollution, Reuters reported Aug. 20, citing industry sources and an analysis of official import and production statistics.
Up to 20% of Chinese demand for low-grade ore is expected to shift toward high-grade ore and iron ore pellets in coming years due to tougher environmental conditions in coastal areas.
Ian Roper, general manager at Chinese market research company Shanghai Metals Market, said Australian exporters of low-grade iron ore will face the biggest challenge in the future as demand shifts to high-grade ore.
China has closed down 700 small steel mills in four years, including 140 million tonnes of steel capacity deemed substandard and 150 million tonnes of inefficient capacity at large companies, according to Reuters.
About 100 million tonnes of steel mills across the country have been ordered to move to coastal areas from inland regions with serious pollution problems, according to a July report,
By 2025, the portion of steel capacity located in the coastal areas will increase to 70% in Shandong province and 50% in Jiangsu province, according to policy advising think tank China Metallurgical Industry Planning and Research Institute.
