China Iron Ore Supply Summary
Our estimated 2022 average total cash cost of Chinese iron ore mines is US$78.80/wet tonne, up from US$77.40/wet tonne in 2021. Rising energy costs have increased both mining and processing costs in the Chinese domestic iron ore sector. However, a weak RMB has partly offset the increase in RMB costs, leading to a minor jump in cash costs in US dollars. We foresee total cash costs decreasing in 2023 to US$78.10/t due to lower energy prices and a weaker RMB while costs in RMB are likely to increase slightly. In 2023, the prices will slide further but still stay above US$100/t, which has meant positive margins for most producers. We anticipate weaker iron ore prices from 2024 onward, which will impact Chinese margins and lead to closures of domestic mine capacity over the medium term. In this report, we review China's iron ore costs, margins, infrastructure, quality, and reserves and outline some of the changes we see happening.