Steel imports likely to decline
By Richard Fu |
August 4, 2010, Wednesday
|
Print Edition
Print Edition
CHINA'S iron ore imports may continue to fall this quarter, extending the decline since the second quarter, due to rising domestic production and slowing demand from steel mills, a senior industry official said yesterday.
Imports dropped 9 percent to 47.2 million tons in June from May, after surging 42 percent to a record 628 million tons last year. Domestic production totaled 101.55 million tons in June, up 11.5 percent from the previous month.
The situation has "an enormous impact on supply and demand on the global market," Luo Bingsheng, vice chairman of the China Iron and Steel Association, said in Beijing yesterday. He added that the market share in China for Vale, BHP Billiton and Rio Tinto - the world's top three ore suppliers - dropped noticeably in June.
Meanwhile, Luo said China may reduce the number of qualified iron ore importers, which could improve the domestic steel industry's bargaining power for the commodity.
He said new rules would soon require traders to meet standards in environmental protection and energy saving, as well as to have sufficient capital. The association, which represents large mills, has previously blamed smaller ore buyers for undermining its position in benchmark price talks with foreign miners and propping up prices.
Still, domestic steel companies have been suffering from rising costs and lower steel prices this year. The average cost of imported iron ore rose 46.4 percent in the first half from a year earlier, the steel association said. Domestic steel prices have been falling since late April, despite a small rebound recently, as government measures to rein in the property market have cut production and lowered prices at steel mills.
Luo said steel mills' profit margins could be further eroded as he forecast a tough situation for the industry this quarter.
Imports dropped 9 percent to 47.2 million tons in June from May, after surging 42 percent to a record 628 million tons last year. Domestic production totaled 101.55 million tons in June, up 11.5 percent from the previous month.
The situation has "an enormous impact on supply and demand on the global market," Luo Bingsheng, vice chairman of the China Iron and Steel Association, said in Beijing yesterday. He added that the market share in China for Vale, BHP Billiton and Rio Tinto - the world's top three ore suppliers - dropped noticeably in June.
Meanwhile, Luo said China may reduce the number of qualified iron ore importers, which could improve the domestic steel industry's bargaining power for the commodity.
He said new rules would soon require traders to meet standards in environmental protection and energy saving, as well as to have sufficient capital. The association, which represents large mills, has previously blamed smaller ore buyers for undermining its position in benchmark price talks with foreign miners and propping up prices.
Still, domestic steel companies have been suffering from rising costs and lower steel prices this year. The average cost of imported iron ore rose 46.4 percent in the first half from a year earlier, the steel association said. Domestic steel prices have been falling since late April, despite a small rebound recently, as government measures to rein in the property market have cut production and lowered prices at steel mills.
Luo said steel mills' profit margins could be further eroded as he forecast a tough situation for the industry this quarter.
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