Chinese stimulus is fuelling an iron-clad building boom. In the past year, Chinese demand for iron ore has grown 24%.

Meanwhile, the pandemic is impeding production in two countries rich in iron ore: South Africa and Brazil, compared to 2019, iron ore shipments are down 9% and 15% respectively.

Chinese demand is outpacing what these countries can supply in the current circumstances and as a result, China is looking elsewhere.

In June, Australia shipped a record-smashing 46.2 million tonnes of iron ore to China. A 17% drop followed between July and August yet the demand hadn’t gone away. 

Ukraine, Russia and India saw a 36% uptick in Chinese exports compared to 2019.

”Demand for iron ore (outside of China) has been weak due to Covid-19, resulting in cargos being redirected to China where demand has been strong. Some integrated steel producers have also reduced steel production and exported more iron ore,” said UBS analyst, Myles Allsop to the Australian Financial Review.

Some analysts viewed China’s lower iron ore imports as a way to punish Australia following the diplomatic spats earlier this year.

However, Chinese imports of Australian steel are picking back up. Shipments increased 5% in September, 1% higher than this time last year. 

As Chinese steel production booms, new environmental regulations require high-grade iron ore and as Australia has some of the highest grade iron ore in the world, we are well positioned to help meet the supply gap.

Much as iron ore led Australia out of the GFC, some analysts think it could do the same again as we recover from the COVID pandemic.

Carpentaria Resources (ASX: CAP) owns a 94% stake in the Hawsons Iron Project, near Broken Hill, NSW. 

The Hawsons Iron Project produces the highest grade iron ore in the world at 70% Fe.

With major project status from the Australian Government and a $5.4 million offtake agreement from Mitsui, the long-life, high margin project has a payback period of one to two years.

Please join a special live investor briefing on Thursday 15th October to hear more about Carpentaria Resources from Chairman Peter Graham. Peter will discuss the future of Australia’s iron ore industry. Register here to book your spot. 

Any advice contained in the presentation is general only and does not consider your objectives, financial situation or needs, and you should consider whether it’s appropriate for you.

Reach Markets have been engaged by CAP to help manage their investor communications.

Sources:

• Carpentaria Announcements
• Carpentaria Hawsons Iron Project
• 23rd Annual Global Iron Ore & Steel Forecast Conference
• Iron Ore Price Update: Chinese demand underlies price resilience
• Clough family graduate in iron ore’s class of 2020
• August Iron Ore Exports Rebound, But Still Well Off June Highs