COVID-19 will cut iron ore production in China by 3% in 2020

Analyst firm GlobalData said iron ore production in China is forecast to decline 3% to 78.2 million tonnes in 2020 due to the impact of the coronavirus (Covid-19). Operating rates at private iron ore mines declined from 34.9% to 29.6% between January and February 2020, and overall production of iron ore in China declined 4.6% year on year. Several mines and factories had to temporarily stop production activities. Deliveries and shipments were either delayed or rescheduled, and there was a shortage of workers unable to return to production sites due to the lengthy Lunar New Year holidays, followed by transport problems due to blockages.

Winneth Bajaj, senior mining analyst at GlobalData, says: “As a result of the slowdown in domestic production, imports of iron ore increased 1.5% year on year in January and February 2020 to 176.8 million tonnes. However, purchases accumulated in ports due to transportation problems due to blockages and stocks in ports reached a three-month high of 131.1 million tonnes by February 7, 2020. ”

GlobalData predicts that China's iron ore production will grow at a compound annual growth rate of 1.1% between 2020 and 2024 to reach 81.6 million tonnes. Bajaj concludes: “Growth will be relatively flat due to the elimination of inefficient steel capacity as part of a three-year Blue Sky environmental initiative that runs from 2018 to 2020. This initiative encourages domestic steel producers to use high grades of iron ore (Fe 58-62%), which mainly comes from Australia and Brazil. ”