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Xinhua Economic News Service

October 22, 2007 Monday 1:15 AM EST




Price hike of iron ore increases pressure on steel enterprises


BEIJING, Oct. 22 (Xinhua) – In the week after the 7-day-long National Day holiday, the price of imported iron ore has kept rising.

The inventory of iron ore at Chinese ports is only 43.5 million tons at present, 540,000 tons less than before the holiday, and most of the inventory are for self use by steel plants, a signed article of Shanghai Securities News states.

General situation is that with import arrivals decreasing and spot price remaining high, the traders are facing increasing risks and therefore are prudent in further purchase, the articles says.

If the spot price of iron ore from India keeps going high, Chinese steel plants may tilt to Australia and Brazil for their supply, an outcome that obviously will not be conducive to the pending public negotiation for iron ore prices for 2008.

Iron ore inventory of Chinese steel plants is low at present, but Chinese steel plants hardly dare to adjust the price, worrying it may produce chained effects once they increase the purchase at raised prices.

It is learned that high cost of imported iron ore has already been a burden that small steel plant can hardly bear, a result China may be glad to see under its backward elimination policy. But it has also flung great losses to other steel plants.

There are experts suggesting Chinese steel plants pay attention to iron ore development and purchase in Russia, China’s neighbor, besides their traditional supply from Brazil, India and Australia. Statistics provided by Russia show that the monthly iron ore export from Russia to China averaged 450,000 tons in the first four months of 2007, more than doubling the amount in the same period of 2006; and the proportion reached 22.5 percent.

October 22, 2007