An iron ore mining site in Australia Photo: cnsphotos

The China Iron and Steel Association (CISA) vowed on Monday to ratchet up efforts to ensure iron ore supplies as Chinese steel mills reported better profitability during the first three quarters of 2021, despite rising raw material costs and tightening environmental protection measures.

Upstream resources supply has become increasingly monopolistic, while the downstream industry in China is highly fragmented. Thus, the importance of strategic supplies for iron ore, coal, coking coal and scrap steel has been underlined, the CISA said in a press release sent to the Global Times on Monday.

The CISA said it will speed up the process of tackling iron ore supplies through more communication and exchanges. It will also develop resource supplies, improve the pricing mechanism for iron ore, and refine futures trading rules to ensure stable industry and supply chains.

In the first nine months, crude steel output increased 2 percent to 80,589 tons. The growth rate was 2.5 percentage points lower than in 2020, the CISA noted. During the same period, the average price of iron ore rose to $171.67 per ton, up 72.64 percent year-on-year. 

The price for coking coal rose by 57.07 percent while that for scrap steel shot up by 36.48 percent.

Faced with growing costs, stringent environmental protection measures and energy conservation requirements, Chinese steel makers optimized their businesses and realized profit totaling 319.3 billion yuan ($49.97 billion), up 123 percent year-on-year. On average, their profit margin rose 2.18 percentage points to 6.03 percent. 

Nonetheless, nationwide restrictions have had a clear impact on crude steel production, with September output down 21.2 percent year-on-year -- the lowest growth rate in three years, according to the CISA.

China's crude steel output accounted for a slightly lesser share of the global total, at 55.45 percent, down 2.81 percentage points from the same period in 2020. 

Data from the World Steel Association also showed that Chinese crude steel production grew at a slower pace than the rest of the world in the first eight months of the year, with China growing at 10.6 percent year-on-year in contrast to 18.1 percent for the rest of the world.

Previously, the CISA vowed to accelerate the development of domestic iron ore sources and the construction of overseas iron mines invested in by Chinese companies in order to secure the country's iron and steel supplies during the 14th Five-Year Plan 2021-25.