During a recent seminar held in Tianjin on the international iron ore market, insiders from the Chinese mining industry agreed that if the iron ore prices continue to fall domestic mines will be forced to halt production due to their considerable losses. This would cause most Chinese steel mills to increase their iron ore imports, leading to even higher reliance on imported ore, causing domestic mines to suffer further in this vicious circle.
At present, iron ore prices in China's domestic market are gradually approaching production costs. In particular, mines in Shandong Province have already suffered losses given the current iron ore prices, and this has driven some mines to call a halt to their operations. If the import quotation of 63.5 percent fine ore drops below the level of $60/mt, a relatively large number of Chinese mines will no longer be competitive.
Industry insiders suggested that the Chinese government should adjust the taxation standard for domestic iron ore exploration, mining and dressing, and at the same time should also hike the tariff rate on iron ore imports so as to maintain import ore prices at reasonable levels.