In recent years, iron ore prices have gradually declined, and fell to the lowest point in 10 years in April this year, compared with the 2011 high of 190 US dollars / ton, a drop of nearly 80%. There is a view that this is due to the oversupply of the iron ore industry. Mr. Geoff Raby, the former Australian ambassador to China, said in an exclusive interview with Dagong.com: “The lower iron ore price is mainly affected by the oversupply of the future, rather than the actual supply and demand situation in the current market.†He further pointed out The current iron ore price drop is deliberately caused by the two extensions (Rio and BHP Billiton), trying to squeeze competitors out of the market through low-cost strategies in order to obtain high monopoly profits. As a veteran of the ore industry, Mr. Qi Jierui believes that the extreme rise and fall of iron ore prices is not conducive to the long-term healthy development of the steel industry. “Because high ore prices will raise the cost of steel companies, and too low ore prices will force most ore suppliers to exit the market, and once suppliers are highly concentrated, iron ore prices will re-emerge.†Mr. Qi Jierui takes the example of Pilbara, Australia's most important ore exporting area. The local ore supply is highly concentrated for a long time. Only BHP Billiton and Rio Tinto have concentrated, and the concentration of the supply side has given them a strong voice. . Since 2000, China's steel industry has grown rapidly. The price of iron ore has soared from US$30/ton in 2003 to nearly US$200/ton in 2011. The Chinese steel industry has paid a high price for this. The high profit of iron ore in the past prompted many companies to join in, and only the suppliers in the Pilbara region increased from the original two to more than 10. According to Mr. Qi Jierui, the two companies have refused to use third-party infrastructure such as railways, terminals, ports, etc., even if new iron ore companies like FMG are willing to pay for commercial terms. This is one of the two most effective strategies to prevent new iron ore companies from entering Pilbara. In 2008, BHP Billiton first tried to merge with Rio Tinto. However, the move was attempted to merge its iron ore industry in Western Australia, but it was unsuccessful when it was unable to achieve this due to fear of a monopoly and opposition from relevant countries and industry groups. Since the above measures will not work, the two extensions will take the situation of causing a serious oversupply to push the competitors out of the market, so that they can return to the "good times" with only two rules. "According to relevant regulations, this practice is called predatory expansion," said Ji Jierui. "At present, the low price of iron ore is not caused by the actual supply and demand of the current market, but by the purpose of propaganda." Mr. Zhai Jieru stressed to the reporter, "Of course we hope that the price can be improved from the current low, but important It’s the convergence of Rio Tinto and BHP Billiton’s oversupply.†Iron ore giant Rio Tinto said in early May that 22 million tons of iron ore capacity has withdrawn from the market in 2015, and it is expected that 85 million tons of capacity will be withdrawn by the end of this year. However, despite the sharp drop in iron ore prices, Rio Tinto did not say it would cut production. Rio Tinto plans to produce about 350 million tons of iron ore in 2015, up from 300 million tons last year. Rio Tinto's long-term plan is to achieve an annual production capacity of 360 million tons. Rio Tinto CEO Walsh also said that the current ore price is still profitable, and the company's counter-market expansion is imperative. BHP Billiton CEO Andrew Mackenzie said recently: "The increased supply of ore at higher prices will take longer to digest, which means that oversupply may last for a while." Earlier this year, Mackenzie also said that BHP Billiton's iron ore output in March increased by 20% year-on-year to 58.9 million tons, while the company's focus is still on production at the lowest cost, and it is necessary to continuously increase productivity. It is understood that after the high point, the market environment has changed suddenly, and the price of iron ore has rapidly dropped to around 45-50 US dollars in recent years. This kind of suppression of mineral prices has led to the closure of 11 iron ore enterprises since 2014. Zhai Jierui explained: “It is acceptable to shut down or merge other companies with low cost competitiveness through normal market behavior, so that the ability of the entire industry can be improved. However, we believe that the market should not be affected by human pressure. For example, the price should not be dominated by market sentiment." Aluminum Oxide Grinding Wheels
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Australian ambassador to China: iron ore low price is the strategy of two extensions to squeeze competitors