Iron ore prices to weaken:
Iron ore prices will trend lower this year with slight fluctuations, and the import price may fall below USD 110 a tonne as the domestic market continues to contract.
Mr Wang Xiaoqi vice chairman of the China Iron and Steel Association told a trade conference that "Iron ore prices have entered a declining path. The recent rapid price downturn is a clear signal.” Since September, the growth in overall steel output has markedly slowed. Growth stopped entirely or even went into reverse in some segments of the market. The iron ore market has seen extreme volatility since September. Import prices slumped from levels of up to USD 200 a tonne down to USD 117 a tonne, though prices recently rebounded to USD 135 a tonne.
Mr Wang said as the effects of China's macroeconomic policies and control measures continued to be felt, it was possible that iron ore prices would fall further.
However, Chinese companies have continued to increase their rights and interests in overseas iron ore mines. The output from such rights and interests totaled 150 million tonnes a year as of the end of 2010, according to statistics from the iron and steel association.That number grew by 30 million tonnes in 2011. The increase will help China cut dependence on foreign owned sources. In recent years, domestic iron ore mining capacity grew by 25% annually on average.
Mines in development since 2008 will gradually reach their full production capacities, assuming a construction cycle of two to three years.
In 2011, domestic iron ore production increased by 283 million tonnes, or 27.2%. However, iron ore imports reached 686 million tons in 2011, up 68%. The nation's iron ore and steel industry paid an extra USD 25 billion in foreign exchange because of the rise in the price of imported iron ore.In a move to gain pricing power for iron ore, a market long dominated by giant global suppliers, and create a transparent pricing system, China launched its first physical iron ore trading platform last month.
The platform was launched by the association in conjunction with the China Beijing International Mining Exchange and the China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters.
Mr Wang said the world's top three iron ore producers Vale SA, BHP Billiton Ltd and Rio Tinto Group are in talks to join the trading platform.
China's major steel companies including Baosteel Group Corp, Hebei Iron & Steel Group Co Ltd, Wuhan Iron and Steel Group Corp, Shougang Group, Angang Steel Co and China National Minerals Co Ltd, a subsidiary of China Minerals Corp have agreed to join the new platform.
Mr Wu Rongqing chief engineer of the China Mining Association said that although Chinese demand for iron ore is still increasing, not all of it is effective demand. He said the steel industry still has too much capacity and the level of iron and steel exports are irrationally high.He estimated that China's raw steel consumption will rise about 4 percent this year to 700 million tonnes. Gross pig iron ore output will reach 654 million tonnes, about 26 million tonnes more than last year.
Mr Wang Xiaoqi vice chairman of the China Iron and Steel Association told a trade conference that "Iron ore prices have entered a declining path. The recent rapid price downturn is a clear signal.” Since September, the growth in overall steel output has markedly slowed. Growth stopped entirely or even went into reverse in some segments of the market. The iron ore market has seen extreme volatility since September. Import prices slumped from levels of up to USD 200 a tonne down to USD 117 a tonne, though prices recently rebounded to USD 135 a tonne.
Mr Wang said as the effects of China's macroeconomic policies and control measures continued to be felt, it was possible that iron ore prices would fall further.
However, Chinese companies have continued to increase their rights and interests in overseas iron ore mines. The output from such rights and interests totaled 150 million tonnes a year as of the end of 2010, according to statistics from the iron and steel association.That number grew by 30 million tonnes in 2011. The increase will help China cut dependence on foreign owned sources. In recent years, domestic iron ore mining capacity grew by 25% annually on average.
Mines in development since 2008 will gradually reach their full production capacities, assuming a construction cycle of two to three years.
In 2011, domestic iron ore production increased by 283 million tonnes, or 27.2%. However, iron ore imports reached 686 million tons in 2011, up 68%. The nation's iron ore and steel industry paid an extra USD 25 billion in foreign exchange because of the rise in the price of imported iron ore.In a move to gain pricing power for iron ore, a market long dominated by giant global suppliers, and create a transparent pricing system, China launched its first physical iron ore trading platform last month.
The platform was launched by the association in conjunction with the China Beijing International Mining Exchange and the China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters.
Mr Wang said the world's top three iron ore producers Vale SA, BHP Billiton Ltd and Rio Tinto Group are in talks to join the trading platform.
China's major steel companies including Baosteel Group Corp, Hebei Iron & Steel Group Co Ltd, Wuhan Iron and Steel Group Corp, Shougang Group, Angang Steel Co and China National Minerals Co Ltd, a subsidiary of China Minerals Corp have agreed to join the new platform.
Mr Wu Rongqing chief engineer of the China Mining Association said that although Chinese demand for iron ore is still increasing, not all of it is effective demand. He said the steel industry still has too much capacity and the level of iron and steel exports are irrationally high.He estimated that China's raw steel consumption will rise about 4 percent this year to 700 million tonnes. Gross pig iron ore output will reach 654 million tonnes, about 26 million tonnes more than last year.
- Umesh Shanmugam
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