Former prime ministerial economics adviser and ambassador to China, Ross Garnaut, believes that Chinese steelmaking has peaked and will fall by over 25 per cent by 2030.
The Australian Financial Review reports that Garnaut, a former economics adviser to prime minister Bob Hawke, has forecast China’s steel production to fall to around 600 million tonnes a year over the next decade-and-a-half.
This differs sharply from the forecasts of the two biggest iron ore producers in Australia, Rio Tinto and BHP Billiton, with are estimating that production will be approximately 1,000 million tonnes.
“My old friends say that Chinese production should fall from a bit above 800 million tonnes today to about 600 million tonnes in 2030,” Garnaut writes in The AFR.
“With Chinese exports pouring onto world markets at an annual rate of 100 million tonnes and taking global prices down with them, and with environmental pressures forcing early responses, much of the shrinkage will happen early.”
This morning iron ore (the key ingredient in steel) prices slumped to $US 46.70 a tonne, the lowest price since 2005/06, reports News Corp.
Iron ore prices fell about 10 per cent in the last week, and 60 per cent since the beginning of 2014.