Dry Bulk Market: Chinese Government to Cancel Domestic Iron Ore Mining Rights, as it Focuses On Higher-Quality Iron Ore Imports
It has been reported today that China will cancel roughly one third of its iron ore mining licenses. We view this is as a very logical decision where iron ore procurement and environmental regulations are concerned. As we discussed in our Weekly Dry Bulk Report and Weekly China Report published at the start of this week, we have remained of the view that Chinese iron import volume has been poised to stay strong even with the recently announced steel production cuts (that have been enacted due to environmental concerns).
It remains our view that the usage of domestic iron ore (which is of much lower quality than iron ore imports) has been set to come under pressure rather than the consumption of iron ore imports. As we have continued to discussed in our work, securing high quality iron ore is now more important than ever in China, even with temporary steel production cuts looming, and we have remained bullish for iron ore import volume prospects. The decision by the central government to cancel a third of iron ore mining rights has strengthened our conviction even further.
Source: Jeffrey Landsberg, Managing Director, Commodore Research & Consultancy