The question for market participants is whether China will really curtail steel production in 2021, or whether ongoing stimulus spending will triumph as authorities prioritise economic growth over pollution and energy consumption concerns. Top exporter Australia has managed to keep its shipments at robust levels, but this hasn't been enough to offset the supply losses from Brazil and still meet China's demand. While China's record steel output has played its role, global iron ore supply has also been hit by a series of issues in second-largest exporter Brazil, which has suffered disruptions from the coronavirus pandemic, mine closures on safety grounds and a fire last month at an export terminal. The spot price of benchmark 62% iron ore delivered to North China, as assessed by price reporting agency Argus, has since retreated back below $160 a tonne.īut the price has been above $150 for almost two months, which is a strong performance considering that the steel-making ingredient held below $100 for the five years between May 2014 and May 2019. LAUNCESTON, Australia, Feb 1 (Reuters) - China’s vast steel sector, and the iron ore industry feeding it, is grappling with a seemingly contradictory policy impulse that it should produce less this year, even as demand remains strong amid post-pandemic stimulus spending.Ĭhina produced a record 1.05 billion tonnes of steel in 2020, helping to drive spot iron ore prices to a one-year peak of $175.40 a tonne on Dec.

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