As China-Australia Ties Worsen, Iron Ore Remains Bulletproof
- Key commodity export untouched as barley and wine are targeted
- Elevated iron ore price is supporting production, investment
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As China-Australia relations descend into a morass of sanctions and mutual recriminations, Beijing is delivering a huge cash windfall to Canberra and Australia’s economy through its insatiable demand for iron ore.
China has few alternatives as it seeks to stimulate its economy post Covid-19 through infrastructure investment, with Australia accounting for more than half of iron ore shipments globally. If Beijing were to try to purchase solely from non-Australian producers, at best it could get 56% of the volumes it typically imports, according to analysis by Goldman Sachs Group Inc.