The impact of the current financial crisis on Chinese steel production has sent shivers through the Pilbara.
Australian mining companies are preparing for possible hard times ahead as Chinese demand for iron ore starts to fall away. So representatives from BHP, Rio Tinto and Fortescue Metals packed their bags for the Chinese port city of Qingdao to try and shore up demand at a major meeting of China's steel producers.
Presenter: Stephen McDonell Speakers: Russell Scrimshaw, Executive Director, Fortescue Metals; Shan Shanghua, General Secretary, Chinese Iron And Steel Association
STEPHEN MCDONELL: I'm standing dockside in Qingdao where a delivery of Australian iron ore is on its way to becoming Chinese steel.
This is the world's biggest iron ore port and it's a huge operation. Rows of cranes are emptying these ships of their contents and building hills of iron ore next to them.
When these ships are emptied, there are others waiting to take their place.
At a five star hotel in town Chinese steel companies were meeting with their suppliers for their annual conference to thrash out prices.
The executive director of Australia's Fortescue Metals, Russell Scrimshaw, was trying to convince Chinese steel companies that they should keep buying high quality Australian iron ore at this time of economic crisis.
RUSSELL SCRIMSHAW: I know things are tight and difficult but I have tremendous faith in the resilience of the people of this country and your capabilities.
STEPHEN MCDONELL: But the Europeans and Americans are buying less Chinese steel, which means China needs less Australian iron ore.
According to China's Iron and Steel Association, 40 per cent of companies in their industry made a loss in September and that could increase to 80 per cent this month.
Shan Shanghua is the Association's general secretary.
"If, let's say, China imports each year from Australia 150-million tons of iron ore - that figure is not going up but down next year" said Shan Shanghua.
He did say though that China's biggest iron and steel enterprises will not be too adversely affected by the current crisis.
As thousands of trucks queue to get in and out of Qingdao port you can see why some people believe that domestic demand alone could soon revitalise China's steel industry - especially if the Government brings forward some infrastructure projects to give the steel companies a shot in the arm.
Australian mining companies would like to see this happen as soon as possible.
