The largest steel market in the world may change its direction, Bloomberg reports. According to forecast from Australian government, production in China will peak in 2018, and then will start to decline. It will, in turn, influence the market of key raw material – iron ore.

Production volumes in 2018 will reach 886 million ton, in 2019 they will decline to 861 million ton and reach 842 million in 2020. Losses in demand will be 34 million ton.

Production decline will take place due to new restrictions related to pollution reduction policy, as well as to industry reforms that will limit supply.

China produces half of world’s steel output today, this is why changes in this market will result in global restructuring.

Average iron ore price will be $51,90 per ton in 2019 and $50,70 in 2020. Spot price for ore with 62% content was $69,15 in China on Monday and $68 on average this year.

Opinion of market participants in regards to production volumes of steel in China differ. BHP Billiton thinks that peak production is still to be achieved. S&P Global Ratings and Moody’s Investors Service forecast decline in consumption.

BHP’s shares gained 1,6% today, stocks of Rio Tinto lost 0,9%, while those of Fortescue Metals Group declined by 1,3%. All three companies are leading iron ore suppliers in the world.