Because China is extremely short of iron ore, and China is the largest iron and steel producer in the world, Australia and Brazil, the major iron ore producers, have formed a similar monopoly economy. You must buy this resource from them. Without iron ore, many domestic enterprises can't produce it, and you can't produce that much iron ore yourself This creates a problem. The current situation is that once Brazil and Australia reach an agreement, China will face such a situation: How much can China people ask for? So now China is desperately looking after these countries, and then tries to control them by holding shares in the big iron ore export companies in these countries, so that it can have certain decision-making power under certain circumstances.

Extended data

Why has iron ore fallen so much recently?

Electric furnace steelmaking and converter steelmaking are not the main reasons why China needs a lot of iron ore at all. Do you know why Middle Eastern countries adopt short process? Because natural gas is cheap, iron can be directly reduced, followed by electric furnace. Why is China a long process? Because we are rich in coal and short of natural gas, the key problem is not steelmaking, but ironmaking! In addition, the yield and quality of long-flow production are more stable and reliable in all aspects. The so-called electric furnace scrap refining is very mature. You only know electric furnace steelmaking. Have you ever heard of L.F. Now steel mills with a little high-end production capacity are equipped with local refining, which is very mature! After refining, continuous casting and steel rolling are carried out, do you know? The cost of smelting scrap steel by electric furnace is high, and the power consumption is not high, but the capacity and quality are unstable, and the cost and quality of scrap steel are not easy to master. The steel mill is a three-shift continuous production process, and people basically turn off the machine, which can maximize the benefits. At the same time, scrap steel can be directly added to converter for steelmaking, and LF and RH are needed after being put into electric furnace, which is not worth the loss. Once the production capacity is small, special steel can be considered. In China, a country with a large number of steel mills with a capacity of 10 million tons, it is difficult for steel mills with small capacity to survive unless they have new tricks.

China can't make any electric furnace steelmaking in a short time, which has nothing to do with technology, but needs it! At present, China's annual output is 654.38 billion tons, which is a conservative estimate. Scrap steel can't meet the demand at all, let alone the stability, reliability and economy I mentioned. If it was worth it, it would have been rolled out long ago. China's iron and steel industry has a high degree of marketization, and Changle soon mastered the production capacity of 1/3.

As for why iron ore has fallen, the main reasons are the cancellation of export tax rebate and the expectation of RMB appreciation! We just want to raise export prices, export inflation to the United States in the opposite direction, and force the Fed to raise interest rates in advance. The latest data shows that the CPI of the United States in May hit a new high since 2008, 5%!

As expected, the recent trade negotiations will have a result, that is, the import tariffs on China goods will be cancelled in advance! Otherwise, we will raise interest rates and shrink the table. Once it reaches 6%, it is very dangerous and may get out of control. Of course, once the interest rate is raised, the US stock market crash is just around the corner. (the answer was updated on 2021-12-17)

The answer refers to Zhihu. Author: the two ends of the sky.