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COVID-19 initial impact to reduce China’s iron ore output by 3% in 2020, says GlobalData

China’s iron ore production is forecast to decline by 3% to 78.2 Mt in 2020 due to the impact of coronavirus (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.”

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