China continues to fight environmental pollution. The measures applied affect the demand and cost of high-quality iron ore. In particular, it is about ore, in which the percentage of iron content should be at least 62 percent.
During the winter period, a number of environmental pollution restrictions are introduced. At the same time, unlike last year, the geography of enterprises that fall under these measures is much wider.
What is the expected growth in demand and prices?
Restrictions concern the use of low-grade ores and capacity of enterprises. The Celestial government believes that steel makers, touched by restrictions, will be forced to use high-quality ore. This is necessary in order to increase the production of steel to the maximum values, while minimizing the amount of energy consumed.
For many steel-producing regions, Beijing has increased the duration of the restrictions. In particular, for Tangshan, the deadline was extended until mid-March 2019.
As you understand, due to the fact that manufacturers of steel will be forced to work only with high-quality ore, demand should grow. Accordingly, prices for this iron ore will be raised.
At the moment, 65 percent ore costs $ 97.15 per ton. The price of 62 percent was $ 73.6. The lowest-grade ore (58 percent) costs 60.28 dollars.
Thus, due to pollution constraints in China, a significant demand for high quality iron ore is projected. This will entail a rise in prices not only for the ore, but also for steel.