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May 15th, 2013 
Peter Nolan
Updated
Australia’s economic fortunes have become increasingly tied to China’s, and over the past decade the strength of Asia’s economic giant has delivered considerable benefits to Australia.
But recent predictions from certain quarters suggest that China’s growth might not be sustainable and that some large commodity exporters could be looking to take a hit in the near future.
However, enormous volumes of iron ore from the Pilbara continue to sail into Ningbo port, just south of Shanghai on China’s wealthy south-eastern coastal strip.
Ningbo Port iron ore terminal general manager Han Weixu says as soon as the large ships now in port have left, others are waiting to take their berths.
He says they unload 300 iron ore ships a year – half of them from Australia.
“China needs to improve its steel production capacity for its economic development,” he said.
China needs to improve its steel production capacity for its economic development … and Australia is the most important import partner for us.
“The iron ore we use mostly comes in from overseas and Australia is the most important import partner for us.
“In 2012, 47 million tonnes of iron ore came through this port, of which 24 million tonnes were from Australia.
“This iron ore goes to the steel factories along the Yangtze River as well as Hunan and Jiangxi provinces.”
Australia’s big miners are all expanding at the moment to deliver even more iron ore to China which has prompted some analysts to warn of an oversupply that could drive down prices and eat into profits.
There is also fear that steel overproduction in China could see iron ore demand fall away.
Yet Mr Han is in constant contact with China’s steel companies and is well placed to hazard a guess at how much ore they will want this year and even into the future.
“In 2013, we predict we will handle 51.5 million tonnes and that Australian iron ore will increase to between 25 million and 26 million tonnes,” he said.
“In 2014, we think the volume will reach 56 million tonnes and that Australian iron ore will reach 27 million to 28 million tonnes.”
Market confidence
As China’s drift to the cities goes on apace and probably still has decades to play out, what was once a country of farmers is being utterly urbanised requiring new subways, roads, bridges and the like.
Apart from the port, Ningbo is also an industrial hub which has attracted Ningbo Zhonglian Steel Structure Company – an Australian outfit building steel structures.
Chairman Sean McMonagle says the joint venture is between Queensland mining structure company Sun Engineering and partners from Canada, Britain and the United States, who have banded together to cash in on the production advantages that come with scale.
“I honestly thought I was going to come into factories where people would be in bare feet and welding with no helmets,” he said.
“I went to a factory in Shanghai that had more technology than shops I’d seen in Australia had more social conscience than some shops that I’d seen in Australia.
“I thought to myself, ‘if this is the competition at the price they’re offering, we’re doomed if we don’t get on to this bandwagon’.”
You look at some of the housing and building and infrastructure that’s going on around us … you’re talking 30, 40 storey buildings and you’ve got 15 of them in one development – that’s just huge
Because Australia avoided the worst of the global financial crisis it kept buying steel structures from the company, constructed using the same iron ore which Australia sent in the first place – much of it going back into the mining industry.
Mr McMonagle says it has experienced 20 per cent growth every year and he expects it will be better in the future.
However, he said one of the challenges – especially with as much as 95 per cent of it for export – is convincing the global market of the product’s quality, so Sun Engineering tradesmen have been bought in to train local staff and ensure quality.
However, Mr McMonagle says confidence in China’s immediate economic future does not only stem from the orders the company is getting.
“You look at some of the housing and building and infrastructure that’s going on around us here and some of these high-rise accommodation complexes: you’re talking 30, 40-storey buildings and you’ve got 15 of them in one development – that’s just huge,” he said.
“But not only have you got that you’ve got that happening 10 times just around this little city … and you think this is happening all over China.”
Topics:
iron-ore,
industry,
business-economics-and-finance,
foreign-affairs,
government-and-politics,
china,
qld,
wa
First posted
Source Article from http://www.abc.net.au/news/2013-05-15/chinas-hunger-for-iron-ore-tipped-to-grow/4686722
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