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It is expected that with the recovery of the global economy, global steel consumption will increase by 3.6% year-on-year in 2021, and the growth rate will slow slightly in the following years. The global crude steel production is expected to show a similar trend, with a year-on-year growth of 3.0% in 2021 and a year-on-year growth of 2.8% in 2022.

China's crude steel output in 2020 exceed 1 billion tons, which has led to an increase in iron ore imports, especially the amount of iron ore imported from Australia. Australia’s iron ore trade accounts for more than half of the global seaborne iron ore trade. And China’s iron ore imports from Australia account for more than 60%. At present, China is seeking to reduce its dependence on imported iron ore and plans to increase its self-sufficiency rate of iron ore resources.

The amount of scrap steel in China's steel production is expected to increase in the next five years. The Chinese government used to restrict scrap imports in 2018 and 2019 in an attempt to prevent low-quality scrap from being dumped into China. In 2020, China's billet imports are estimated to increase by about 700%, reaching more than 1,800 tons. However, this has not significantly affected China's alarming demand for imported iron ore.

At present, the proportion of scrap steel in China's steelmaking raw materials is only 20%. In the future, driven by market demand, technological improvement and policy support, it is estimated that by 2026, the proportion of scrap steel in China's steelmaking raw materials will rise to 25%. And the growth rate will get faster and faster.

China is committed to mining new iron ore, including the proposed Simandou iron ore in Guinea, but these are unlikely to achieve great results in the short term. Therefore, scrap steel is expected to become the main source of the increase in the supply of domestic steelmaking raw materials in China. As China's steel demand is likely to remain strong, it is expected that China's imports of Australian iron ore will remain stable in the short term.