China imports record volume of iron ore in March
April 17, 2009
April 14 (Xinhua) — China’s steel industry overestimated the country’s demand for iron ore and as a result imported a record high amount of the material in March.
A surge of domestic steel output and price increases in the beginning of 2009 raised market expectations. Many domestic steel mills and traders increased orders for iron ore in February and March as they anticipated demand would continue growing, said Liang Shuhe, deputy-director with the Foreign Trade Department of the Ministry of Commerce (MOC), at an industry conference in the port city of Tianjin Monday.
China’s iron ore imports topped 52.08 million tonnes in March, setting a monthly record high. It beat the last record which was just set in February. That’s when the country imported 46.74 million tonnes of iron ore.
In the first quarter, China imported a total of 130 million tonnes of iron ore. In 2008, iron ore imports totaled 440 million tonnes.
“The imports in March mostly came from orders made in February. Iron ore was priced at 80 U.S. dollars a tonne then, but dwindled to 60 U.S. dollars a tonne now. It means huge unrealized losses for steel mills and traders who betted on price hikes,” said Du Wei, an analyst on iron ore with Umetal.com.
Those unrealized losses for the 52.08 million tonnes of iron ore imported in March could be about 1 billion U.S. dollars, Du said.
Liang said iron ore prices were hinged to steel prices.
“Domestic steel prices have dropped and will further dwindle. Thus it’s inevitable for iron ore prices to go down,” Liang said.
Iron ore stockpiled at ports stood at 70 million tonnes in March, nearing a historic high, according to anonymous sources within the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters.
Due to declining iron ore prices, an increasing number of domestic iron ore mines are closing down, said Zhang Ye, deputy-general-manager of China National Minerals Co., Ltd.. No specific figures were available.
“About 90 percent of China’s iron ore mines are suffering from losses,” Du said. “Steel is a kind of product that could be recycled and thus its scarcity could not be exacerbated in the long term.”
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Iron Ore Price May Decline By 50 % in 2009 in China
January 29, 2009
Iron ore contract prices may fall as much as 50 percent this year amid a slowdown in China, the world’s biggest consumer of the raw material, according to Australia’s richest woman and mining magnate Gina Rinehart.
“We’re hearing 30 percent, 40 percent, 50 percent discounts to last year’s contract price,” Rinehart, who controls closely held Hancock Prospecting Pty, said in an interview with Bloomberg Television. That compares with the average forecast of a 30 percent cut in a Bloomberg survey of 11 analysts last week.
Chinese steelmakers are likely to win their first cut in contract prices in seven years as a global recession curbs demand for commodities. Rinehart’s partner, Rio Tinto Group, the world’s second-biggest exporter of the ore, and Baosteel Group Corp. began talks this month to set prices from April 1, according to two company executives who asked not to be identified.
“The economy in China is very sad right now,” Rinehart said. China’s economy may rebound soon and “ultimately, prices will rise,” she said. Hancock isn’t party to the talks.
Hancock Prospecting is partner with Rio in the Hope Downs iron ore project in Western Australia. Hancock is also seeking to develop the Roy Hill iron ore mine in Western Australia.
Rio, BHP Billiton Ltd., and Brazil’s Cia. Vale do Rio Doce, which handle three-quarters of traded iron ore, sell the steelmaking material under long-term contracts to China’s 20 biggest mills and traders at agreed annual prices.
China may be asking for a price cut of between 40 percent and 45 percent, Macquarie Group Ltd. analysts led by London-based Jim Lennon said in a Jan. 12 report. UBS AG analysts have forecast a decline of 40 percent. A 30 percent cut would still be the second- highest price on record.
Source: China Steel Net.com
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48 Major Steel Mills in The Red
January 2, 2009
About two thirds of China’s major steel mills were in the red in November, suffering from high prices in raw materials and the decreasing prices of steel products.
Forty-eight out of 71 large and medium-sized domestic steelmakers saw a loss in November (six more than in October), with total losses for the month in the neighborhood of 12.77 billion yuan, China Securities Journal reported yesterday citing anonymous sources.
Analysts largely contributed the loss to high iron ore prices and dropping steel prices, and they remained pessimistic for the mills’ performance in December.
Chinese steelmakers agreed to pay a record of $92 per ton for iron ore in the 2008 long-term contract, and steel prices have dropped about 40 percent since June as a result of the global financial crisis.
Authorities are considering measures including buying some steel products for reserves to help the industry through the rough time, Minister of Industry and Information Technology Li Yizhong recently said in Beijing.
Reports said the government would likely spend 10-15 billion yuan to establish a reserve of 3-5 million tons.
Some major steelmakers have increased steel prices on the news.
Angang Steel will raise the price of hot rolling steel by 350 yuan per ton from January; Shougang Group will rise by 300 yuan per ton and China’s largest steelmaker Baosteel will also raise product prices by 6 to 10 percent from February.
Analysts said building up stocks may provide some support to prices in the short term, but the policy could also mean producers take longer to emerge from the current slump in demand with a U-shaped recovery rather than a V-shaped bounce, since the government stocks may return to the market as prices recover.
The government could also increase export tax rebates on high-end steel products and will encourage industry reshuffling as well as innovation.
Source: China Steel Net.com
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Vale Increases 2008 Iron-Ore Price to China?
September 5, 2008
Sept. 3 (Bloomberg) — Cia. Vale do Rio Doce raised iron ore prices for Chinese customers by about 20 percentage points, Steel Business Briefing said, citing an e-mail from the Brazilian miner.
So-called South System iron-ore fines are now 86.4 percent more expensive than in 2007, compared with a 65 percent increase agreed to earlier this year, SBB said today in a story that was distributed by e-mail. Carajas fines are 92.4 percent higher, compared with 71 percent previously, the industry publication said.
Australian iron ore producers achieved an average 2008 price increase of 85 percent, SBB said.
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