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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SinoSteels’ Overseas Takeover Accepted by Shareholders
September 19, 2008
WO major shareholders in Australian iron ore miner Midwest Corp have accepted takeover offers from Sinosteel Corp, giving the Chinese steel maker more than an 82 percent stake in the company.
Sinosteel said yesterday its offer had been accepted by Murchison Metals Ltd, which holds 9 percent of Midwest shares, and Armadale Offshore Inc with 12 percent.
Sinosteel wants access to Midwest’s Australian iron ore assets to serve China’s booming steel industry, which is dependent on global mining giants Rio Tinto Ltd and BHP Billiton Ltd. China’s mills have had to agree to price rises of up to 96 percent for iron ore from the two.
Sinosteel gained a controlling 50.97 percent stake in Midwest in July but is still pursuing full ownership.
China View
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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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Chinese Steel Makers is Cutting Output
September 4, 2008
CHINESE steel makers are cutting output because of weaker demand and higher raw-material costs
Production was reduced by 10 percent from August, Yang Siming, general manager of the Jiangsu-based company, said at a steel conference in Xiamen yesterday.
“A lot of steel makers were making losses from August,” Yang said. “Small mills were forced to close, with bigger ones reducing output.”
Contract iron ore prices have gained as much as 97 percent and coking coal more than doubled for Chinese mills.
Nanjing Steel buys two-thirds of the iron ore it needs through long-term contracts, Yang said.
China’s prices of hot-rolled coil, a benchmark product, fell 13 percent to 5,163 yuan (US$755) a ton yesterday from 5,957 yuan on June 5.
Xinyu Iron and Steel Co, a Jiangsu Province-based steel maker, is bringing forward annual maintenance of its plants because of slowing demand, Chairman Xiong Xiaoxing said at the conference.
Nanjing Steel United plans to build a mill in Lianyungang port, Jiangsu Province, Yang said.
Nanjing needs to close 2 million tons of obsolete capacity and buy other rivals to help win government approval, he said.
Xinyu Steel is building a 3-million-ton-a-year plant.
Source:Xinhua
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