Shanxi iron ore production resilient despite increasing seaborne supply Report

Insight 28 June 2018

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Report summary

Following a recent visit to mines and steel mills in Shanxi in June 2018, we identified that the price recovery since 2016 has changed the competitive landscape of the domestic iron ore market in China. Higher prices have incentivised iron ore producers in Shanxi to increase production as they are now generating profits. Major iron producing regions like Hebei are seeing a decline in iron ore concentrate production because of production restrictions and environmental policies. Shanxi has taken advantage of the situation and is filling the supply gap. Rising land transport costs and a preference for high quality iron ore is protecting Shanxi mines from being displaced by seaborne iron ore.

Executive summary
Falling hot metal production in Hebei boosts Shanxi iron output
Freight charges to Shanxi make domestic iron ore competitive
Low production cost will keep Shanxi iron ore output steady
Increasing demand for high-grade ore has revived Shanxi mines

Tables and charts

This report includes the following images and tables:

Contestable markets in China
Shanxi and Shandong increase hot metal production to compensate for Hebei losses
Hot metal production and iron ore production in Shanxi