China May Cut Iron Ore Imports by 21%, Group Says

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30 Apr 2009

China, the world’s largest consumer of iron ore, may cut imports of the steelmaking ingredient by about 21 percent this year as demand from mills slumps, an industry group said. Imports may fall to 350 million metric tons, Zou Jian, chairman of the China Metallurgical Mining Enterprise Association , said today in Beijing at a Metal Bulletin conference. The country bought 443.6 million tons last year, according to customs data in January.
Brazil’s Cia Vale do Rio Doce, the largest supplier of iron ore, has offered a 20 percent price discount to bolster sales and rival BHP Billiton Ltd. has increased cash ore sales after customers deferred deliveries. Iron ore producers and steelmakers are negotiating 2009 benchmark contract prices.
Prices may fall more than expected as suppliers seek to maintain sales levels, Zou said. He didn’t give a price forecast. China may only need 310 million tons of imports, he said.
The Asian nation boosted imports from Australia by 26 percent last year, India by 15 percent and Brazil by 3 percent, Zou said.
Imports Level
Chinese imports may “keep” at a high level for the next few months before dropping for the year, Zou also said.
Imports jumped 46 percent to a record 52.1 million tons in March from a year ago, the Chinese customs office said April 10.
Iron ore mines in China that started after 2005 are mostly unprofitable at current prices, Zou said. About one quarter to one third of mines in the country started before that period.
More than 50 percent of China’s iron ore mines have closed, Fortescue Metals Group Ltd., Australia’s third-largest exporter of the material, said today at the same conference.
Mines producing high-cost magnetite ore are likely to stop operations, Russell Scrimshaw, executive director of the Perth- based company said.
Still, China may need to increase imports by 25 million metric tons a year between now and 2025 to meet its future steel demand, Scrimshaw said. The country may need to consumer 750 million tons of steel annually from 2025, he said.

Source: Bloomberg