The Global Iron Ore Trade and Production
The advent of globalisation and lowering of trade barriers have influenced a significant increase in the demand for natural resources and contributed to the growth of several industries to supply these resources. Iron ore is certainly no exception. Iron ore accounts for approximately 98% of raw materials used in steel making (USGS 2014). The development of steel mills globally has attracted the trade and mining of iron ore exports, significantly increasing the world’s iron ore and raw steel productions (refer to Figure 1).
Figure 1: Growth of World Iron Ore and Raw Steel Production 1994-2013
Source: USGS Minerals Information
Although iron ore competes with substitutes commodities like aluminium, glass, wood and plastic in the auto motors, construction and container industries, it still remains a competitive alternative and its continued growth is further supported by emerging countries like China and India fuelling the demand of iron ore in recent years. Indeed, the industrial growth and urbanisation of China has resulted in China being seen as an economic powerhouse globally due to its sheer size of import demands and exports (refer to Figure 2). Indeed, by the early 2000s, China had quadrupled its import of iron ore (approximately 111-203million tonnes) since the 1990s (approximately 37-52 tonnes), overtaking the Japanese steel industry in imports and steel production (OECD 2014).
Figure 2: Annual Growth Rates of Steel Markets (percentages)
Source: OECD 2014, Datastream
Since its industrial expansion and integration into the global economy, China’s booming domestic economy is the primary force in advancing construction material demands. In recent years, China has been reported to consume approximately 60% of the world’s iron ore to produce half of the world’s steel production. As seen in Figure 3 below, the top five produces of iron ore are from China, Australia, Brazil, India and Russia...