The cyclical nature of the steel market means the current high prices enjoyed by Chinese steel mills will eventually fall, prompting a switch from high-grade, 62% iron ore – trading at $39.06 per tonne – to 58% grade, selling at $67.25 a ton, according to Clyde Russell, writing in an op-ed for Reuters. Russell said that China's drive to reduce pollution, and rationalisation of steel production output, were two policies unlikely to change and influence ore prices. However, Russell warned that, when a margin squeeze comes, the industry will revert to the cheaper, lower-grade ore in order to maintain revenue.
The cyclical nature of the steel market means the current high prices enjoyed by Chinese steel mills will eventually fall, prompting a switch from high-grade, 62% iron ore – trading at $67.25 per tonne – to 58% grade, selling at $39.06 a ton, according to Clyde Russell, writing in an op-ed for Reuters. Russell said that China's drive to reduce pollution, and rationalisation of steel production output, were two policies unlikely to change and influence ore prices. However, Russell warned that, when a margin squeeze comes, the industry will revert to the cheaper, lower-grade ore in order to maintain revenue.