Australian iron imports to China slow but ‘roaring’ demand likely to return, analysts say
- Diplomatic ties have remained icy in recent years, but Australian exports of iron ore had cushioned a complete fall-out in the relationship
- Curbs to steel production, a pursuit of emissions reduction, a crackdown on the debt and growth in the property sector were factors that affected demand last year
China’s imports of Australian iron ore, the bellwether of the trading relationship between the two countries, fell nearly 3 per cent last year as Beijing sought to reduce steel production and carbon emissions.
Diplomatic ties have remained icy in recent years over a range of issues, including Australia’s push for a probe over the origins of Covid-19, but Australian exports to China – iron ore in particular – had cushioned a complete fall-out in the relationship.
Exports peaked in 2020, when China fired up its post-Covid industrial recovery before starting to slow.
“We think exports of iron ore will continue to struggle in 2022 as China’s GDP growth remains subdued and the Chinese construction sector continues to struggle,” said Ben Udy from Capital Economics after the Australian Bureau of Statistics on Thursday released new trade data.
“This should also see prices of iron ore weaken this year, which will also weigh on export values to China,” the economist added.
Australia exported 694 million tonnes of iron ore to China in 2021, down from 713 million tonnes in 2020, according to the latest data from China customs.
Last year’s imports however remained higher than the volume in 2019 of 665 million tonnes.
