China works to ease iron ore supply strains

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

19 Nov 2010

China, a country hungry for iron ore, is ramping up its mineral exploitation efforts and upgrading its steel-making industry's structure as it deals with its iron-ore supply dilemma. China produces more than a third of the world's steel and imports 68 percent of the world's steel shipments. But its heavy reliance on iron-ore imports have forced domestic steel mills to accept high prices as they lack clout in annual price negotiations, Jiao Yushu, a consultant for the Metallurgical Mines Association of China said at the ongoing China Mining Congress and Exhibition.
China's self-sufficiency in iron ore was about 30 percent in 2009, when imports soared to 628 million tonnes, which was a sharp rise from the 384 million tonnes it imported in 2007, Jiao noted.
The world's top three iron ore suppliers -- Vale, Rio Tinto and BHP Billiton -- which account for 66.5 percent of global iron ore shipments, have monopolized the market and hiked prices, Jiao said.
Chinese demand has led to the three miners boosting their iron ore output. The three's combined annual output rose from 400 million tonnes in 2004 to 600 million tonnes in 2009. But even as Chinese demand gooses their profits, their appetite for price hikes persists, consistently pressuring Chinese steel mills, Jiao said.
To gain a stronger hold in price talks, the three announced plans to shorten the length of the agreements in international iron ore prices, ending the decades-old annual benchmark pricing system.

Source: Xinhua