China to “halve iron ore” use by 2030

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Australia’s nemesis, The Global Times, is back today with more Australia bashing:

The halving number is still but I am inclined to agree that the falls will be heavy. Scrap will play a role. At the current rate of increase it will absorb roughly one-third of steel production in China:

China steel recycling climbing steadily

China steel recycling climbing steadily

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The bigger problem is that this will coincide with big falls in steel output as urbanisation winds down. Recalling that at 64%, China is already approaching the 80% urbanisation rate of most developed markets:

Chinese urbanisation running out of rope

Chinese urbanisation running out of rope

So, if steel output falls 20% while scrap output rises to one-third of output then we will see a swing in Chinese iron ore demand of minus half a billion tonnes which is not half its iron consumption but is pretty close to half its import volumes:

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Cumulative loss of seaborne Chinese demand for iron ore

Cumulative loss of seaborne Chinese demand for iron ore

That’s not all of the Pilbara but it’s two-thirds of it!

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.