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Why China is now a major concern for the Reserve Bank of Australia as iron ore prices halve in two months

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Why Australia’s Most Powerful Banker Is So Concerned About China And The Price Of Iron Ore – And What It All Means For YOU

  • Reserve Bank of Australia discussed fall in iron ore prices at September meeting
  • Raw materials used to make steel have halved to just $100 a ton since July
  • The Chinese Communist Party government has also ordered cuts in steel production










China is now one of the biggest concerns for Australia’s most powerful bankers as iron ore prices have halved in just two months.

In July, the raw material used to make steel was worth $200 per metric ton, but in recent days it has fallen to $100 for the first time since July 2020.

To meet its climate change targets, the Chinese Communist Party government has ordered a cut in steel production, reducing the need for iron ore from the Pilbara region of Western Australia.

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China is now one of the biggest concerns for Australia’s most powerful bankers as iron ore prices have halved in just two months (Pictured is Chinese President Xi Jinping)

The Reserve Bank of Australia has now revealed that the decline in iron ore prices was discussed at its September meeting chaired by Governor Philip Lowe.

“There was also uncertainty about the effects of a range of recent policies, including those aimed at mitigating risks to financial stability, reducing carbon emissions and achieving broader societal goals,” the monthly meeting minutes said. the bank Tuesday.

“The price of iron ore had fallen from a high level recently as the Chinese authorities stepped up their efforts to curb steel production.”

Chinese President Xi Jinping’s directive to cut steel production is affecting Australian shareholders, especially those holding shares in mining companies, which have been hit hard.

China’s commitment to meet its climate change targets by 2060 has also put pressure on its second-largest property developer, Evergrande, which failed to meet an annual interest payment obligation on Monday.

Before the steel production cut, unfinished residential towers were already being demolished, highlighting the problem of ‘ghost towns’.

Since July 29, the iron ore miner Fortescue Metals Group has seen its share price fall from $26.30 to $14.72.

BHP’s stock price has plunged from $54 to $37.73 since Aug. 4, while Rio Tinto has plunged from $134.40 to $95.47 over the same period.

In July, the raw material used to make steel was worth $200 per metric ton, but in recent days it has fallen to $100 for the first time since July 2020 (pictured is Fortescue Metals Group chief executive Andrew Forrest with Prime Minister Scott Morrison at Christmas Creek in the Pilbara region of Western Australia)

In July, the raw material used to make steel was worth $200 per metric ton, but in recent days it has fallen to $100 for the first time since July 2020 (pictured is Fortescue Metals Group chief executive Andrew Forrest with Prime Minister Scott Morrison at Christmas Creek in the Pilbara region of Western Australia)

Iron ore was until recently immune to China’s trade sanctions on Australian exports ranging from wine to lobster, beef, lamb, timber and cotton.

But Brazil is now better able to mine iron ore and is recovering late from the 2019 Vale tailings dam collapse.

IG market analyst Kyle Rodda said “a very targeted effort” by the Chinese Communist Party to cut steel production had hurt iron ore prices.

“There is concern about a slowdown in Chinese real estate development and construction activity, where you can see lower demand for commodities, especially iron ore,” he told the Daily Mail Australia.

“It’s an environmental driver, part of this really big push from Chinese policymakers to reform and restructure their economy right now.”

China's bid to meet its climate change targets by 2060 has also put pressure on its second-largest property developer, Evergrande, which failed to meet an annual interest payment obligation on Monday.

China’s bid to meet its climate change targets by 2060 has also put pressure on its second-largest property developer, Evergrande, which failed to meet an annual interest payment obligation on Monday.

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