Pellet pivot: China’s taste for quality iron ore grows as smog war heats up

A woman mounts elevator panels inside a factory of a company manufacturing elevators in Shenyang, Liaoning province, China June 14, 2018. (REUTERS)
Updated 21 August 2019

Pellet pivot: China’s taste for quality iron ore grows as smog war heats up

  • Over a four-year campaign against pollution, as well as excess capacity in heavy industry, China has shut 700 small steel mills with 140 million tons of steel capacity deemed sub-standard, plus 150 million tons of inefficient capacity at larger firms

BEIJING: China’s demand for iron ore pellets and high-quality ore is expected to accelerate in 2020 as a result of Beijing’s push to shift dozens of steel mills to coastal regions in its battle to stop smog blanketing industrial cities.
Relocating plants to the coast, with stricter environmental requirements, means up to 20 percent of China’s more-than-a-billion-ton annual ore demand will shift from lower- to higher-grade ores, according to industry sources and a Reuters analysis of official import and production statistics.
Steel executives say the demand shift in the top ore market will mean declining purchases of low-grade supplies and greater demand for pelletised ore of a higher grade — with potentially major implications for ore exporters in Australia.
“Iron ore producers who can sell pellet-feed into China will be better placed than those who don’t have such products,” said Ian Roper, general manager at Shanghai Metals Market, a Chinese metals market research company, “with the major Australian (lower-grade) specialist suppliers facing the biggest challenge in the medium to longer term.”
Brazil’s Vale, the world’s biggest iron ore miner, is also the top producer of pellets and pellet feed. LKAB in Sweden and Switzerland-based Ferrexpo are the second- and third-largest pellet producers.

 

Vale declined to comment, but directed Reuters to its Aug. 1 quarterly earnings call, where it said pellet production would be 45 million tons for 2019, down from 55 million tons in 2018 due to outages at some Brazilian operations.
Over a four-year campaign against pollution, as well as excess capacity in heavy industry, China has shut 700 small steel mills with 140 million tons of steel capacity deemed sub-standard, plus 150 million tons of inefficient capacity at larger firms.
Remaining mills will need to further cut emissions, and those located in the smog-prone eastern rust belt must move to designated steel parks along the coast.

Decoder

64% - Iron ore pellets, typically with 64 percent iron content or above, can be shovelled directly into blast furnaces without going through a dirtier process known as sintering.


Huawei’s third-quarter revenue jumps 27% as smartphone sales surge

Updated 17 October 2019

Huawei’s third-quarter revenue jumps 27% as smartphone sales surge

  • American companies, significantly disrupting its ability to source key parts
  • Huawei was all but banned by the United States in May from doing business with American companies

SHENZHEN, SHANGHAI: Huawei Technologies Co. Ltd’s third-quarter revenue jumped 27%, driven by a surge in shipments of smartphones launched before a trade blacklisting by the United States expected to hammer its business.
Huawei, the world’s biggest maker of telecom network equipment and the No. 2 manufacturer of smartphones, was all but banned by the United States in May from doing business with American companies, significantly disrupting its ability to source key parts.
The company has been granted a reprieve until November, meaning it will lose access to some technology next month. Huawei has so far mainly sold smartphones that were launched before the ban.
Its newest Mate 30 smartphone — which lacks access to a licensed version of Google’s Android operating system — started sales last month.
Huawei in August said the curbs would hurt less than initially feared, but could still push its smartphone unit’s revenue lower by about $10 billion this year.
The tech giant did not break down third-quarter figures but said on Wednesday revenue for the first three quarters of the year grew 24.4% to 610.8 billion yuan.
Revenue in the quarter ended Sept. 30 rose to 165.29 billion yuan ($23.28 billion) according to Reuters calculations based on previous statements from Huawei.
“Huawei’s overseas shipments bounced back quickly in the third quarter although they are yet to return to pre-US ban levels,” said Nicole Peng, vice president for mobility at consultancy Canalys.
“The Q3 result is truly impressive given the tremendous pressure the company is facing. But it is worth noting that strong shipments were driven by devices launched pre-US ban, and the long-term outlook is still dim,” she added.
The company said it has shipped 185 million smartphones so far this year. Based on the company’s previous statements and estimates from market research firm Strategy Analytics, that indicates a 29% surge in third-quarter smartphone shipments.
Still, growth in the third quarter slowed from the 39% increase the company reported in the first quarter. Huawei did not break out figures for the second quarter either, but has said revenue rose 23.2% in the first half of the year.
“Our continued strong performance in Q3 shows our customers’ trust in Huawei, our technology and services, despite the actions and unfounded allegations against us by some national governments,” Huawei spokesman Joe Kelly told Reuters.
The US government alleges Huawei is a national security risk as its equipment could be used by Beijing to spy. Huawei has repeatedly denied its products pose a security threat.
The company, which is now trying to reduce its reliance on foreign technology, said last month that it has started making 5G base stations without US components.
It is also developing its own mobile operating system as the curbs cut its access to Google’s Android operating system, though analysts are skeptical that Huawei’s Harmony system is yet a viable alternative.
Still, promotions and patriotic purchases have driven Huawei’s smartphone sales in China — surging by a nearly a third compared to a record high in the June quarter — helping it more than offset a shipments slump in the global market.