article in the australian: china ore discovery, page-9

Good read below, so much for China's downturn in steel output and requirements for coal and IO......

Sucker punch of the decade.


By Steve James

NEW YORK, June 25 (Reuters) -

China's steel production is soaring way over estimates and the country has paid above the benchmark price for a shipment of coking coal, which could transform the global market for the key steel-making ingredient, a key coal industry analyst said on Thursday.
"We have just heard of a spot sale from Australia to China of $132 per tonne, which is over the benchmark price of $129," Gerard McCloskey, of the McCloskey Group, told a coal industry conference.
He said if China was buying coking, or metallurgical, coal for over $130 per tonne, "this will herald what will happen the rest of the year." It has become a net importer of the coal since there have been several mine closures in China recently.
In an interview with Reuters, McCloskey said news of China paying over the benchmark price was a first. "We've seen a lot of spot business done lower than that into China -- $105, $115, so this is a major switch.
"China is going to be a major buyer through the year and maybe indefinitely, they seem to have closed up quite a lot of production," he said.
Paying that price shows China is really serious "and underlines their real need and the lack of availability of coking coal in China," McCloskey said.
"Their steel market is going like the clappers (vigorously) and they're importing a lot more iron ore in the last two months -- massive tonnages.
"If it carries on, it's overwhelmingly significant," he said, adding it would transform the whole coking coal market.
The news comes as the global steel industry has started to show early signs of rebounding from the recession that dried up demand late last year, forcing steelmakers to cut production sharply.
Analyst Chris Plummer, managing director of Metal Strategies said that China was on track to produce 540 million tonnes of steel this year -- way above its previous estimate of 465 million tonnes.
"And it does not look like slowing down," he told the Coal USA 2009 conference organized by the McCloskey Group.
McCloskey said that trend was good for coking coal exports, especially to Asia. But, despite robust growth in China and India, he said the general outlook for coking coal remains poor and is "appalling" in North America, Europe and Brazil. (Editing by Marguerita Choy)