3 charts that show China's dominance of global steel and iron ore markets

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When it comes to global steel markets, China is a behemoth, producing and consuming around half of total global output each and every year.

Yes, half.

Only in August, China produced 74.6 million tonnes of crude steel. Not only was that a record high, it also topped the 69 million tonnes produced by the 66 other nations monitored by the World Steel Association.

It didn’t used to be that way, but over the years, China has, as is the case with many commodity markets, become the leading global player.

Nothing shows its rise to prominence over the past few decades than the three charts below from Macquarie Bank.

Source: Macquarie Bank

Moving left to right, they show the split between global steel consumption, growth in seaborne iron ore demand — a key ingredient in the steel making process — along with the source of Chinese iron ore supply.

And do they tell a story.

Be it share of global steel consumption or growth in iron ore seaborne demand, China is now the dominant global player.

According to Macquarie, China accounted for 80% of all steel growth, and 90% of all seaborne iron ore demand growth, in the years between 1980 to 2016.

It also notes that Chinese iron ore imports have continued to rise as domestic production has fallen away, undermined by falling prices and Chinese mine closures on environmental and financial grounds.

With Chinese steel demand now far stronger than prior decades, its mean that major iron ore producers, such as Australia, have benefited in a significant way.

According to data from the Australian Bureau of Statistics, the value of Australian iron ore exports in 1996 stood at $2.91 billion. By 2006 — one decade later — that figure swelled to $14.37 billion. Fast forward another ten years and the value soared to $53.755 billion.

While prices have fallen significantly from the levels seen before and after the global financial crisis, export volumes have more than made up for this, resulting in the continued increase in export values.

And Australia, as seen in the charts above, can thank China for much of that increase.

However, with China now such a dominant player in the global steel market, if steel demand there were to falter, Australia would also feel that impact.

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