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Chinese resource security policies and the restructuring of the Asia-Pacific iron ore market
Journal article   Open access   Peer reviewed

Chinese resource security policies and the restructuring of the Asia-Pacific iron ore market

J.D. Wilson
Resources Policy, Vol.37(3), pp.331-339
2012
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Abstract

This paper reviews the restructuring of the Asia-Pacific iron ore market in the wake of the rise of the Chinese steel industry. Prior to the 2000s, this market was characterised by two key features-high firm-level concentration on both the producer and consumer sides, and price determination through annually negotiated benchmark pricing between Australian mining and Japanese steel firms. However, owing to rapid growth in the Chinese steel industry and its emergence as the region's principal iron ore consumer, the Asia-Pacific iron ore market has been dramatically restructured during the last decade. This process has been accelerated since 2005 by Chinese governmental resource security policies, which have sought to address current record high iron ore prices through the use of foreign investment to sponsor new market entrants and the formation of an import cartel amongst the Chinese steel firms. This paper evaluates how these policies have driven restructuring in the Asia-Pacific iron ore market, through an analysis of the growth of China's steel industry, Chinese resource security policies aimed at lowering iron ore import costs, and their effects upon the regional market's ownership structure and price determination mechanisms. It argues that while Chinese investment and cartelisation policies have catalysed significant changes to the ownership and pricing structures of the Asia-Pacific iron ore market, they have carried only mixed benefits for the Chinese steel industry's resource security.

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#7 Affordable and Clean Energy
#9 Industry, Innovation and Infrastructure
#11 Sustainable Cities and Communities
#12 Responsible Consumption & Production
#13 Climate Action

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6 Social Sciences
6.115 Sustainability Science
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