Some iron ore traders view the indefinite suspension of the China-Australia Strategic Economic Dialogue last week as a potential threat to the iron ore trade between the two countries.
Chinese steel mills, the largest importers of Australian high-grade ore, also rushed to lock in supply in the event that trade restrictions are imposed by and China.
On Thursday, Beijing halted the high-level economic dialogue with Canberra – a move seen by many as political retaliation for Canberra’s axing of the state of Victoria’s non-binding Belt and Road pact with China last month. That same day, iron ore reached US$202 a tonne.
While prices of both iron ore and its end product, steel, had been rising before the past week’s Chinese Labour Day holiday, iron ore prices and iron ore futures contracts at the Dalian Commodities Exchange are now rallying sharply on the speculative premise that the price of iron ore imported into China would soar if Beijing were to cut back or restrict Australian supplies.
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