China’s tightening environmental policy weighs on Hebei iron ore supply Report

Insight 20 July 2018

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Report summary

China's environmental policies have reduced iron ore production in Hebei province. Production costs are likely to increase due to the new regulations and we expect many small and medium size mines to close in the near future because they cannot afford to comply with the new policies. Mines that previously closed are unlikely to enter the market as the barrier for re-entry is too high. As a result of these regulations, it will be difficult for domestic concentrate to compete with seaborne ore. We expect that seaborne supply will continue to replace domestic sources in coastal regions in China. High grade fines, concentrates, and direct charge ores will benefit the most from this change.

Executive summary
New focus on environmental policies will harm domestic production
Safety concerns will add more pressure to reduce production and eliminate iron ore capacity
Steel mills will use more seaborne ore because of limited domestic production