After being countered by China, Australia discovered! It is understood that this week, China has stopped all BHP Billiton's US dollar-denominated iron ore, even the goods floating at sea.
Without a doubt, the Chinese side this time to stop the purchase of iron ore, which is valued in the US dollar, it can be more than enough, both to reduce the domestic steel industry, but also to improve the settlement status of the RMB, can also hit the price of iron ore in Australia.
Let's talk about the overheating of the domestic steel industry first. In the past few years, the domestic steel industry has been booming, and its production capacity has continued to expand. However, as a result, by the end of 2022, my country's crude steel production capacity has exceeded 1.2 billion tons, but domestic consumption demand has stabilized at around 1 billion tons.
This more output capacity can make the industry stronger, enterprises are making money, engaging in vicious competition, the price is down and down, and the profit is also thin.
In 2024, China's cumulative production of crude steel 10.05 billion tons, compared to 1.7% decreased, combined crude steel consumption of 8.92 billion tons, compared to 5.4% decreased, demand decrease is significantly greater than the decrease in output, many enterprises have fallen into the difficult situation of increased production - price reduction - loss.
So, this suspension of Australian iron ore imports is to heat down this overheated steel industry, so that the industry can return to the track of healthy development.
Let's look at this matter of improving the status of RMB settlement. Under the background of decoupling between China and the United States, the US dollar may not be so easy to use in the future. If we still use US dollars to settle big goods, it will be troublesome.
You think, in the US dollar settlement, we not only have to bear the risk of exchange rate fluctuations, but also have to pay a lot of exchange fees, and the internationalization of the RMB is the trend, iron ore as one of the largest commodities imported in our country, is of course an important breakthrough in the internationalization of the RMB.
Brazil's Vale has long agreed to use RMB for iron ore trade with China, but Australia's BHP Billiton has always insisted on settling in US dollars. This time, we stopped the purchase of iron ore denominated in US dollars, just to let them know that we have the final say in what currency we use to settle things in China, especially resources.
Moreover, with the enhancement of China's economic strength, we should all accept RMB when exporting products in the whole industrial chain, so that those countries that want to buy our things can first sell their US dollars and exchange them for RMB, so that the "circle of friends" of RMB can grow bigger and bigger, and the hegemonic position of the US dollar is slowly shaken.
Finally, let's talk about the impact on the price of Australian iron ore. Australian iron ore has always been our main source of imports, but they often make small moves on the price.
These mining giants have long monopolized the pricing power of iron ore, and even if the global supply of iron ore increases, China's demand slows, they still want to maintain high prices and even raise prices.
But we in China are not easy to mess with. This suspension of purchasing is to tell them that we are not buying this game anymore. Our China is the world's largest iron ore importer, accounting for 80% of Australia's iron ore exports. If we stop, they will definitely be anxious.
And we have no other choice, Africa's Siemens iron mine project in Guinea is progressing smoothly and is expected to be officially put into production by the end of 2025, when it will provide us with a stable supply of high-quality iron ore, see how much they are.
In short, China's countermeasures this time are quite wise. They not only meet the needs of our domestic industrial development, but also enhance our right to speak on the international economic stage.
However, it is really interesting to see how this matter will develop in the future and whether Australia will make changes. Do you think Australia will obediently submit and accept RMB settlement and reasonable prices? Or will we continue to bear it hard? Welcome to leave a message for discussion in the comment area.
Without a doubt, the Chinese side this time to stop the purchase of iron ore, which is valued in the US dollar, it can be more than enough, both to reduce the domestic steel industry, but also to improve the settlement status of the RMB, can also hit the price of iron ore in Australia.
Let's talk about the overheating of the domestic steel industry first. In the past few years, the domestic steel industry has been booming, and its production capacity has continued to expand. However, as a result, by the end of 2022, my country's crude steel production capacity has exceeded 1.2 billion tons, but domestic consumption demand has stabilized at around 1 billion tons.
This more output capacity can make the industry stronger, enterprises are making money, engaging in vicious competition, the price is down and down, and the profit is also thin.
In 2024, China's cumulative production of crude steel 10.05 billion tons, compared to 1.7% decreased, combined crude steel consumption of 8.92 billion tons, compared to 5.4% decreased, demand decrease is significantly greater than the decrease in output, many enterprises have fallen into the difficult situation of increased production - price reduction - loss.
So, this suspension of Australian iron ore imports is to heat down this overheated steel industry, so that the industry can return to the track of healthy development.
Let's look at this matter of improving the status of RMB settlement. Under the background of decoupling between China and the United States, the US dollar may not be so easy to use in the future. If we still use US dollars to settle big goods, it will be troublesome.
You think, in the US dollar settlement, we not only have to bear the risk of exchange rate fluctuations, but also have to pay a lot of exchange fees, and the internationalization of the RMB is the trend, iron ore as one of the largest commodities imported in our country, is of course an important breakthrough in the internationalization of the RMB.
Brazil's Vale has long agreed to use RMB for iron ore trade with China, but Australia's BHP Billiton has always insisted on settling in US dollars. This time, we stopped the purchase of iron ore denominated in US dollars, just to let them know that we have the final say in what currency we use to settle things in China, especially resources.
Moreover, with the enhancement of China's economic strength, we should all accept RMB when exporting products in the whole industrial chain, so that those countries that want to buy our things can first sell their US dollars and exchange them for RMB, so that the "circle of friends" of RMB can grow bigger and bigger, and the hegemonic position of the US dollar is slowly shaken.
Finally, let's talk about the impact on the price of Australian iron ore. Australian iron ore has always been our main source of imports, but they often make small moves on the price.
These mining giants have long monopolized the pricing power of iron ore, and even if the global supply of iron ore increases, China's demand slows, they still want to maintain high prices and even raise prices.
But we in China are not easy to mess with. This suspension of purchasing is to tell them that we are not buying this game anymore. Our China is the world's largest iron ore importer, accounting for 80% of Australia's iron ore exports. If we stop, they will definitely be anxious.
And we have no other choice, Africa's Siemens iron mine project in Guinea is progressing smoothly and is expected to be officially put into production by the end of 2025, when it will provide us with a stable supply of high-quality iron ore, see how much they are.
In short, China's countermeasures this time are quite wise. They not only meet the needs of our domestic industrial development, but also enhance our right to speak on the international economic stage.
However, it is really interesting to see how this matter will develop in the future and whether Australia will make changes. Do you think Australia will obediently submit and accept RMB settlement and reasonable prices? Or will we continue to bear it hard? Welcome to leave a message for discussion in the comment area.