The increase in domestic resources supply is predictable

Since 2014, the output of domestic raw ore has been declining year by year. In 2018, the output slipped to a new low in nearly 10 years. But in recent years, as cold rolled steel pipe price continue to rise, stimulating the enthusiasm of domestic mines, the annual output has steadily recovered. Iron ore prices hit a record high in the first half of 2021, accelerating the release of new production capacity in domestic mines, mainly in the main producing areas in North China. According to incomplete statistics, 78 iron-ore related projects were approved in Hebei Province in the first half of last year, while 43 projects were approved in the first half of 2020, with a significant year-on-year increase.

In the first nine months of last year, fixed asset investment in iron ore mining grew 25% year on year, while private investment grew 24%. In the first six months of last year, China’s iron ore production totaled 491 million tons, up 15.9 percent year on year and the highest level in the same period since 2018. Monthly output in June reached a year high of 87.87 million tons. Although in the second half of the year, due to the impact of increasingly strict safety inspection of Hot Rolled Round Steel Pipe, the superimposed iron ore price entered the downward channel, to some extent inhibited the production enthusiasm of domestic mines, domestic raw ore output fell, and the cumulative year-on-year growth rate continued to fall. After entering September, although the power supply is tight, the impact on mineral processing is not as obvious as mining. In 2021, domestic raw ore output totaled 980 million tons, an increase of 13% year-on-year.

With the continuous development of domestic iron ore resources, the annual output of domestic concentrate is expected to increase to 370 million tons during the 145th Five-Year Plan. It is expected that the annual increase of domestic fine powder production will be about 15-20 million tons this year. The increase in domestic ore production last year reduced the dependence on imported ore to about 75% from more than 80% in previous years, improving the supply structure of steel pipe manufacturer in China. In the future, our overseas layout of iron ore project is also worth looking forward to.

With the continuous development of domestic iron ore resources, it is expected that the annual output of domestic concentrate is expected to increase to 370 million tons during the 145th Five-Year Plan, and there is further room for replacement of imported ore in the future. Considering that the supply of round steel pipe will continue to be loose in the next few years, the bargaining power of foreign mines will be gradually enhanced.