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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World’s main iron ore producer optimistic about China demand
February 24, 2009
Brazilian mining giant Vale do Rio Doce, the world’s biggest iron ore producer, expects to ship a record-high 30 million tonnes of iron ore to China in the first quarter of 2009, it said on Friday.
China is Brazil’s single biggest customer for iron ore and the mining industry is sensitive to any change demand from the Asian giant, which is still in growth as other large economies slide towards recession.
“Demand in China is coming back beyond previous levels … China is helping cover a lot of weakness in other markets,” said Jose Carlos Martins, executive director of ferrous minerals.
Chief Executive Roger Agnelli said steel mills in Europe had, like China, been burning through their iron ore and steel stocks and could be expected to start buying again in the second quarter.
On Thursday, the company announced fourth quarter net profits of 10.44 billion Reales (4.44 billion US dollars), more than double the 4.41 billion Reales it made in the same three-month period of 2007 and the 4.82 billion Reales profit in quarter three.
The company said that cost controls, production cuts and a weaker local currency helped it offset weaker demand for metals. (The weaker Brazilian currency inflated its earnings at home from dollar-denominated exports). The Brazilian currency Real has shed about 33% of its value against the US dollar since hitting a nine-year high last August.
Overall revenue totalled 17.94 billion Reales in the fourth quarter, up from 15.21 billion Reales in the year-earlier period but down from 21.39 billion Reales in the third quarter of 2008.
However according to US GAAP accounting principles, Vale’s fourth-quarter net profit fell 47% to 1.37 billion US dollars from 2.57 billion in the year-ago period and 4.82 billion in the third quarter.
The global market turmoil had seen demand for iron ore plummet in the last quarter of 2008. Vale slowed production at some of its mines in Brazil and abroad and in December announced it was cutting 1,300 jobs and put 5,500 on mandatory paid vacation.
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Chinese Ore Demand Leads to Further Freight Increases
February 11, 2009
The Baltic Dry Index – a composite of 22 main freight routes – leapt over 10% on 9 February to 1,815 aided by rising Capesize rates. The jump came on Monday, a day that is traditionally subdued in activity terms as shipping companies concentrate on vessel position lists.
Tubarao-China hit $25/tonne on Monday, up over $5/t in under a week to its highest level since early October. The long-term average of Tubarao-China since the beginning of 2003 is $38/t, brokerage Simpson Spence & Young tells Steel Business Briefing. Brazil-Rotterdam shipments reached $11.50/t, a rise of almost $3/t since 4 February, while Australia-China was up around $2.80/t at $10/t.
Brokers attribute the gains to stronger Chinese iron ore demand, primarily out of Brazil, and increased congestion: around 50 Capesize vessels are waiting to berth off China. Chinese ore stocks at port have increased slightly over the last few weeks, to just over 60mt according to SSY, but this is unsurprising because of the higher activity.
Tonnage in the Atlantic basin also looks tight in the short-term – according to brokers. This means there are less open ships from charterers to choose from, which normally pushes up rates.
Shipments of iron from India to China, normally carried out on Supramax vessels with a deadweight of between 50-60,000 t, have also climbed as a result of stronger chartering interest. Charterers are paying around $14,000/day for the route, equivalent to around $11/t. This is substantially up from the October bottom of $2,000/day.
Source: Steel Business Briefing
http://www.steelbb.com
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China strains to see light at end of tunnel
February 11, 2009
China strains to see light at end of tunnel
By Geoff Dyer at Financial Times
China to the rescue? There has been a surge of hope in the markets over the past 10 days that China’s struggling economy has already turned a corner.
The Baltic dry shipping index – the much-watched measure of the cost of shipping raw materials around the world – has jumped more than 50 per cent in a week on hopes of rising demand for commodities from China, while the prices of several metals have also risen sharply. The Chinese stock market is up 13 per cent in the 10 days since the end of the Chinese new year holiday.
Such optimism might seem strained given the avalanche of downbeat economic news that has come out of China over the past three months. Yet some government officials have started to sound a similar tune.
Official newspapers on Tuesday quoted Su Ning, deputy governor of the People’s Bank of China, as declaring that the first signs of recovery had become visible at the end of last year and that China could be the first big economy to recover.
Investors betting on a Chinese rebound are confident that the government’s huge package of fiscal and monetary stimulus measures is beginning to bite and there is some evidence to back them up.
In recent days local media have reported that new loans issued in January reached Rmb1,200bn ($176bn, €135bn, £120bn) following big increases in lending in November and December. If the figure is confirmed, it would be more than three times the average in the first nine months of last year. (Reuters reported that the figure was even higher at Rmb1,600bn.)
The strong credit growth is an indication that the government is succeeding in using state-owned banks to push money through the door.
“Unlike their counterparts in the rest of the world, China’s banks should be an effective transmission mechanism for the ongoing loosening of monetary policy,” says Paul Cavey at Macquarie Research.
Rising prices for iron ore, steel and other metals are being interpreted as signs that China’s big infrastructure spending plans are being implemented quickly. A senior Chinese official told the Financial Times last week that the Rmb4,000bn of projects in the government’s fiscal stimulus had already been approved.
Source: Financial Times
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China Likely to Launch Steel Product
January 30, 2009
China is likely to launch steel products futures trading this March on the Shanghai Futures Exchange, with linear steel and threaded steel to be the first futures varieties, according to an insider.
The introduction of steels futures will help enterprises prevent price risks through hedging and is helpful to restructuring of the domestic steel industry.
Also, it will help change China’s passive status in international iron ore negotiations. China may gradually gain some pricing power on the international steel market.
The source also said futures products of major building materials such as linear steel and threaded steel surely would come out earlier than rice futures.
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