Amid heightened trade tensions with Australia, Beijing may look to cut steel demand to stabilise prices and reduce potential economic risks, experts say.
China may step up efforts to reduce steel demand as authorities and industry groups grow increasingly uneasy about high iron ore prices amid a trade dispute with its biggest supplier Australia, according to analysts.
China’s state-dominated steel sector, represented by China Iron and Steel Association (CISA), has been sounding the alarm about surging prices, urging the central government last week to help with market “malfunctions” and improve policies in the futures market.
“I don’t think the high iron ore price is a factor in the trade dispute between the two countries, but it’s probably not helping,” said Shane Oliver, chief economist at investment manager AMP Capital. “Not that there is much that can be done about it in the short-term beyond moving back away from using market forces to determine the price.”
China’s trade sanctions on Australia are hurting Chinese reputation as a reliable trading partnerShiro Armstrong
Tensions between the two nations escalated further on Thursday with China’s National Development and Reform Commission saying it had “indefinitely suspended” its high-level economic dialogue with Australia.