2006 contract leads iron ore price increase in China

SteelOrbis Shanghai Influenced by the news that Baosteel agreed on a 19 percent price increase in iron ore, imported ore prices in local markets saw continuous rise throughout the week. With domestic ore prices unchanged, the trading volume shrunk a little compared with the previous week. On June 16, the total inventory of iron ore in China's twenty-three major ports was at 42.37 million metric tons, down 100,000 metric tons compared with the level of the previous week, and the inventory continues to go down. The relevant departments of Chinese government began to clear up the 40 million mt inventory stocking at the ports. On June 20, National Development & Reform Commission and other departments jointly prepared an announcement to urge to dispose the imported iron ore inventory at the ports. It says that “the excessive amount of imported iron ore has exceeded the actual requirement for the production of domestic steel mills. The continuous increase of imported iron ore inventory not only increases the pressure on port stocking and railway transportation, but also artificially expands the domestic demand of imported iron ore. Therefore, steel mills should transport their iron ore to the factory as soon as possible. Traders are strictly prohibited from keeping their products and waiting for prices to rise. They should quicken their sales according to rules.” If this document goes into effect, it will have a great influence on the iron ore market in short term and the iron ore prices may therefore see slight decrease.