The 2007 International Iron Ore Market Seminar was held in Shanghai on 5 September. The seminar attracted widespread attention, especially taking place as it did on the eve of the new round of international iron ore price negotiations. The four main issues on which speakers at the seminar dwelt may be classified under the following headings:
1. China's demand for iron ore will continue to rise in the next few years
China's crude steel output is expected to reach 700 million tons in 2010. Consequently, the consumption and price of iron ore will continue to increase in 2008. The rising spot ore price is a reflection of the current demand in China.
2. China's iron ore demand will begin to lessen in 2009
In 2009, world economic growth is expected to slow down with a strong impact anticipated for the steel industry. Analysts stated that even July's 14.64 percent year on year steel production increase, which was 11.44 percent slower than January, might also be an indication of this long-term slowdown. If this trend continues, iron ore demand may also stop increasing.
3. The demand for imported iron ore may decrease gradually
China's domestic demand for iron ore is expected to increase by around 70 million tons this year. Due to the growth of around 40 to 45 million metric tons in domestic ore output, China needs only approximately 30 million metric tons from overseas, up by only nine percent year on year. As a matter of fact, the output of medium-sized and large mines in China rose to 321.28 million metric tons in the first six months, up 29.28 percent compared to the same period of last year. Furthermore, the total output of small domestic mines was around 50 million metric tons. Due to the technological developments regarding the use of low quality ore, domestic iron ore is expected to be used more and more in China. Even so, the absolute volume of imported iron ore is still huge and is expected to be over 500 million metric tons in 2010.
4.Transportation costs will continue to put pressure on Chinese steelmakers
Transportation costs have become a key factor. The average CIF prices of imported iron ore rose 21.54 percent to $74.64/mt in the first half of this year, much higher than the increase in FOB prices. It is believed that this trend will continue, even though the quantity of new bulk ships has increased remarkably in recent years.
In the first six months of this year, China's imports of iron ore rose to 187.9 million metric tons, up 16.46 percent year on year. Australia continues to be the biggest iron ore exporter to China, accounting for nearly 38 percent of total imports, followed by India, Brazil and South Africa in that order.