Since the beginning of this year, the price of iron ore has continued to rise. The domestic DCE iron ore futures price has been at a historical high since the listing of this product, and the main contract price of iron ore in Singapore has also recently reached a record high. China's iron ore is highly dependent on foreign sources. In the context of the supply-side oligopoly structure of the international iron ore market and the flood of global liquidity, it is necessary to be wary of the rapid rise in upstream raw material prices that erodes the fruits of economic recovery.
This round of iron ore price increases began in the second quarter of last year, and the increase so far has exceeded 100%. This round of rise is divided into two stages. The first stage is driven by manufacturing demand brought about by China's rapid resumption of work and production and the return of global orders. From the data point of view, my country's PMI index rebounded rapidly after bottoming out in February last year and remained in the expansion range. Correspondingly, after the macroeconomic bottomed out in the first quarter of last year, the next three quarters continued to rebound from the previous quarter, and the year-on-year growth rate continued to increase. This stage continued until the end of the fourth quarter of last year, and finally achieved an annual economic growth rate of 2.3%. Leading the global economic recovery, and the only major economy that has achieved positive economic growth. The second phase started at the end of last year, and was mainly driven by the global economic recovery brought about by the large-scale vaccination of various countries, which in turn formed a demand resonance drive.
Since the second quarter of last year, in the process of responding to the epidemic and stimulating the economy, many countries have adopted monetary easing policies, which has brought about the flood of global liquidity and boosted the rise of global commodity prices. According to data from the Bank for International Settlements, at the end of the third quarter of 2020, the global macro leverage ratio reached 277.7%, up 33% from the beginning of 2020, the highest annual increase since 2000. According to data from the International Finance Association, about 313 billion U.S. dollars will flow into emerging market countries in 2020. At the beginning of this year, the United States offered an economic stimulus plan of 1.9 trillion U.S. dollars. With the release of a large amount of liquidity, global bulk commodities have experienced a significant upswing. As an important industrial raw material, the current rise and volatility of iron ore prices also show obvious monetary and financial characteristics.
China is the world's largest iron ore demander and importer. On the one hand, my country's crude steel production exceeds 50% of the world, and the demand for iron ore exceeds half of the world; on the other hand, more than 80% of the iron ore required for smelting in my country needs to be imported. However, under the four major mine oligarchs on the supply side of the international iron ore market, we have not obtained the pricing power corresponding to the scale of demand. Looking at the downstream of the industrial chain, my country's manufacturing industry is still in the process of optimizing product structure and increasing product added value. The bargaining power of products on the international market and the demand side is not strong enough.
The rapid and substantial increase in iron ore prices has brought many effects to downstream industries. The first is that the production cost of the steel industry is greatly increased, because the cost of iron ore accounts for more than half of the cost of steel production; the second is that the increase in cost will be transmitted downstream along the industrial chain. Since the fourth quarter of last year, the price of home appliances has generally increased. It is closely related to this cost transmission; third, from the perspective of the entire industry chain, the sharp rise in iron ore prices has raised the cost of downstream manufacturing, while eroding the profits of the real economy during the current round of economic recovery to a certain extent. Financial capital raises the price of iron ore through financial pricing mechanisms such as futures and swaps. In fact, it transfers profits through price leverage, allowing the domestic real economy to subsidize overseas mines and financial capital.
In short, the fruits of my country's economic recovery have not come easily. This year is the beginning of the "14th Five-Year Plan" period. my country is faced with many important tasks such as deepening supply-side structural reforms and accelerating the construction of a new development pattern. It should take multiple measures to curb the rapid rise in the prices of raw materials such as iron ore and consolidate the results of economic recovery. The first is to further strengthen the information disclosure of the iron ore market and stabilize market expectations; the second is to help entity companies hedge against rising costs through hedging and other methods; the third is to continue to promote the integration of the steel industry to increase industry concentration and the right to speak in raw material pricing; Fourth, we must guide the flow of capital to the manufacturing industry, increase financial support for the real economy, and severely crack down on the speculation of iron ore by domestic and foreign financial capital.
