Iron ore price hits record high in Australia amid tensions with China
Canberra [Australia], May 20 (ANI): The price of iron ore in Australia has reached an all-time high and mining companies’ market shares are reaching new highs amid mounting tensions with China.
The surge has raised concerns about market speculation with Chinese officials, who earlier this month reduced tariffs on some steel inputs as a cooling measure, Nikkei Asia reported.
The deterioration of political ties between China and Australia, linked to issues such as restrictions on Huawei technologies, blocked investment deals and investigations into the origins of the COVID pandemic, has thrown the spotlight on trade iron.
Supply and demand factors now working in favor of miners could change quickly, as ore shipments from other sources disrupted by the COVID-19 pandemic rebound and Chinese steelmakers, the miners’ best customers, under greater pressure to reduce production.
“There are specific peculiarities in the market at the moment,” said James McGlew, executive director of brokerage firm Argonaut, according to Nikkei Asia, adding that “it is volatile, and this has led speculators to jump in as well. on the basic product (iron). “
Iron ore futures hit a record high of $ 233.10 per tonne last week according to S&P Global Platts. Although they have recovered, prices remain well above the average of $ 160 per tonne seen earlier this year and are about double the levels of a year ago.
Over the past year, China has taken steps to block or curb imports of cotton, barley, beef, lobsters, timber and wine from Australia, but not iron. According to trade data, Australia supplies 60 percent of China’s ore imports while China absorbs 70 percent of Australian exports.
After last week’s trade battles, the Dalian and Shanghai commodity exchanges increased margin requirements and trading fees for iron contracts, among other measures. These measures initially caused ore prices to drop to as low as USD 187 per tonne, but the China Iron and Steel Association, representing local producers, called on authorities to go further in curbing speculative activity, has reported Nikkei Asia.
As of Tuesday, iron ore futures were down to around $ 215 per tonne.
In early May, Beijing suspended its activities within the framework of the China-Australia strategic economic dialogue in its latest retaliatory measure. Iron ore prices rose $ 39 per tonne over the next three trading days amid speculation that shipments could be affected.
On Tuesday, China’s National Development and Reform Commission said it would investigate iron ore trading activities while encouraging domestic exploration and the development of new import channels.
Meanwhile, Canberra expects an AUD 30 billion ($ 23.38 billion) tax windfall on record ore exports of $ 104 billion forecast for the year ending June 30, Nikkei Asia reported. (ANI)