“Governing a great nation is like cooking a small fish”—it requires balance, timing, and precision. In the same spirit, China’s management of its iron ore pellet import policy has evolved with careful calibration across decades. Through well-timed policy shifts and nuanced market regulation, China has built a stable and efficient market mechanism that supports both national strategy and industrial resilience.
Policy Evolution: From Securing Supply to Green Transition
In the 1990s, as China’s economy expanded rapidly, steel demand surged, driving an equally sharp rise in iron ore pellet consumption. At that time, domestic production could not meet demand, so the central policy priority was “securing supply.” Imports were strongly encouraged, supply channels diversified, and trade partnerships expanded to ensure stable raw material inflows for the booming steel sector.
After China joined the WTO, its market became increasingly open. Pellet imports continued to climb as China integrated into the global resource system, forming deep trade ties with Australia and Brazil—traditional giants in iron ore supply. Between 2000 and 2010, these two countries accounted for over 70% of China’s total pellet imports, providing the backbone for China’s industrial growth.
Looking at our neighboring countries, they face their own challenges. While Russia boasts abundant iron ore resources, the thick permafrost layer poses daunting extraction costs. Kazakhstan’s iron ore, though easier to access, is often hidden in inaccessible mountainous terrains, requiring substantial infrastructure development.
Following supply-side reforms, the focus shifted from “securing quantity” to “optimizing quality.” Overcapacity and structural inefficiencies in the domestic steel industry required better-quality inputs. Policies encouraged enterprises to increase imports of high-grade pellets and to establish long-term partnerships with suppliers to reduce costs and supply risks. For example, Baowu Group adopted long-term contracts to stabilize raw material supplies and hedge against price volatility—creating a model that helped steady the broader pellet market.
With the introduction of China’s Dual Carbon Goals, policy direction pivoted toward “green and low-carbon.” Stricter standards now favor high-grade, low-impurity pellets to support energy efficiency and emission reduction. Enterprises are encouraged to develop and adopt green pelletizing technologies, accelerating the steel industry’s transition toward sustainability.
China Mineral Resources Group: Reshaping the Global Pricing System for Iron Ore and Pellets
Market Regulation: The Dance Between State and Market
China’s pellet market stability results from a multi-layered coordination between government and industry. State-owned enterprises (SOEs) play a key role through long-term agreements. The China Mineral Resources Group (CMRG), for instance, consolidated procurement to negotiate long-term supply contracts, stabilizing both supply and prices. Between 2023 and 2024, CMRG’s long-term model ensured stable pellet supplies for major steelmakers, effectively dampening domestic price volatility.
Import quotas—though increasingly market-driven—remain a flexible tool during critical periods. Adjustments based on domestic demand and production capacity help prevent extreme import fluctuations that could destabilize the local market. When domestic output faces temporary overcapacity, import quotas are reduced to protect domestic producers.
The expansion of RMB settlement has also reduced currency risks while strengthening China’s voice in global trade. Between 2023 and 2025, the share of yuan-based transactions in pellet trade has steadily risen, contributing to a fairer global pricing environment.
Port inventory management further anchors market stability. Take Qingdao Port as an example: by releasing stock during tight supply periods and increasing reserves when supply is abundant, it smooths price swings. During international disruptions, Qingdao’s agile inventory adjustments help stabilize domestic prices and availability.
Ultimately, China’s pellet market operates under a “dual-track mechanism”: state-guided regulation + market-based pricing. The government sets strategic direction and ensures supply security, while market forces determine real-time prices based on demand and cost factors. Together, they maintain equilibrium and sustainable growth.
Price Correlation: Seeking Stability Amid Global Volatility
Historically, China’s pellet prices were highly correlated with global benchmarks such as the Platts Index. This was largely due to concentrated import sources—Australia and Brazil dominated supply, and their production or freight fluctuations directly impacted China’s costs. Shipping rate volatility and exchange rate movements further amplified domestic price swings.
However, this correlation has been declining in recent years. China has deliberately diversified its supply network, with Iran, India, and Russia increasing their market share in China’s imports between 2020 and 2024. This diversification mitigates exposure to single-country risks. At the same time, domestic production and technological upgrades have strengthened China’s self-sufficiency, reducing reliance on imported pellets and stabilizing prices despite international turbulence.
Conclusion: Lessons from the Integration of Policy and Market
China’s success in managing pellet imports stems from aligning policy design with industrial demand. From securing supply to promoting low-carbon transformation, the policy direction has been both pragmatic and forward-looking. Through diversified sourcing, domestic substitution, and flexible regulatory tools, China has achieved price stability, supply security, and sustainable growth.
This “policy stability + market pricing” model offers valuable insights for other bulk commodities such as coking coal and nickel ore—both facing similar challenges of global price volatility and supply risk. While each commodity requires context-specific solutions, the principle remains: a steady policy framework empowers market resilience.
As the global resource landscape continues to shift, a critical question emerges:
Can China further refine this “policy-guided stability” model to adapt to increasingly complex and volatile international markets?
