Iron ore front and centre of Chinese governments mind

The following article in the AFR highlights just how important securing iron ore supplies is to the Chinese government. Iron ore isnt in the spotlight the same way battery metals are but this article is a clear signal as to its importance worldwide.

Read the full article here.

Our key takeaways:

• China is moving to consolidate the country’s iron ore imports through a new centrally controlled group by the end of this year
• China is the world’s biggest consumer of iron ore with its 1 billion tonne a year steel industry absorbing about 70 per cent of global production, most of it supplied by Australia
  
  
• Beijing hopes the new entity can secure lower prices through larger bulk purchases made on companies’ behalf.
  
  
• The Chinese plan will also look to “organise bigger investments in overseas mines”.
  

At face value this article may seem like a net negative for iron ore explorers/producers, we think it actually highlights just how front of mind iron ore is for the Chinese administration.

The fact that Australia supplies most of Chinese iron ore demand will mean that both sides of the demand/supply curve have equal bargaining power.

We expect demand for steel (and in turn iron ore) to increase significantly into the future and with the investments being made into countries like India for steel manufacturing capacity, we expect the price for iron ore to be largely set by the market.

We hold the following company’s as iron ore exposures in our portfolio:

Iron Road (ASX: IRD)

• Development stage, Iron ore, SA.

Panterra Minerals (ASX:PFE)

• Exploration stage, Iron ore, SA.