According to data from the Australian Bureau of Statistics (ABS), in May 2021, Australia's merchandise exports to China hit a record high of 39.2 billion Australian dollars (equivalent to about 192.5 billion yuan). Exports to China increased by 16 percent, including iron ore exports to China, which increased by 2 billion Australian dollars, a 20 percent jump from the previous year.
It is reported that Australia is one of the main sources of China's iron ore imports, 80% of the country's iron ore is sold to China, while 60% of China's iron ore imports from Australia. In the first five months of 2021, bilateral trade between China and Australia surged 23 percent year-on-year to $87.88 billion (about 569 billion yuan), with iron ore accounting for half of the total, according to the data.
Why is China so hungry for iron ore? That's because China is the world's largest producer of steel. China's total steel production in the first five months of 2021 was about 473.1 million tons, up 13.9 percent year-on-year, accounting for 56.5 percent of the global total, according to the World Iron and Steel Association.
But the International Energy Agency's goal of achieving zero emissions by 2050 means that reducing steel production is even more important. In order to pursue better steel quality, enhance the development of the steel industry, and promote low-carbon steel production, China's National Development and Reform Commission (NDRC) issued a statement on June 17, 2021 that domestic steel and steel enterprises need to reduce steel production in accordance with the ban on new capacity.
Strictly following the NDRC's ban on steel production capacity could affect imports of iron ore, and China may buy fewer Australian iron ore.
