Raw materials shortage troubles China
China's forecasted rise in steel demand for 2005 will also increase the need for coke and
iron ore requirements in the country.
The latest disclosures from the Chinese government show a 41.15% growth in the year-on-year
iron ore imports.
China imported 208.9 million tons of
iron ore in 2004, which is a marked increase over the 148 million tons it imported in 2003. The country is projected to augment its imports by another 60 million tons in 2005.
China's moves in 2004 to restrict
coking coal exports and cap coal export quotas drew a negative reaction from the EU. The country's promise to export 4.5 million tons of coke to the European Union allayed fears that the EU would complain to the World Trade Organization.
China faces a shortage of raw materials however, and that in turn may bring the EU's complaint back to the agenda later in 2005.
The coke price in eastern
China has been quite strong in January, and the ex-factory price of 2nd grade metcoke in Jiangsu and Anhui provinces ranged between 1'250-1'300 Yuan/ton. A 30% increase in
iron ore prices forecasted for 2005 has already affected the
billet prices, which have increased nearly 20% in
China.
Billet prices vary between RMB 3'050/t (Shanxi) and 3'300/t (Jiangsu).
The prices of thin gauge
CRC re-rolling quality
HRC and
galvanized coil also continue to soar due to both strong demand and lack of availability. The average market price of 1.0mm CR sheet rose 80 Yuan/ton, reaching 6'941 Yuan/ton. 2.75mm HR coil increased to 5'232 Yuan/ton, while 5.5mm HR coil climbed to 5012 Yuan/ton. 0.3 mm full hard cold rolled ex-
India offered at $760/t cfr and 0.30 mm
galvanized coil at $860/t to the Chinese market.The prices are expected to climb even higher. Re-rolling quality 1.8 mm-2.0 mm hot rolled coil from
Russia is being offered at $620-630/t cfr in
China, while products from
India are selling for $630-640/t cfr.
Because the volume of semi-finished exports more than tripled in 2004, the country is also expected either to lower or remove the VAT rebate on exports of semi-finished products.
The raw material shortfall has prompted Chinese companies to search for investment opportunities in Latin American countries.
Brazil,
Mexico,
Chile,
Argentina and
Panama are
China's top five
trading partners in Latin America. The mining development plan initiated by the Bolivian government has also attracted
China's attention.
Other means of gaining access to raw materials in Latin America are being sought by
China through Free Trade Agreements or Economic Cooperation Agreements.
Likewise,
India recently signed an economic cooperation agreement with
Chile.
India has also taken steps to reinforce its ties with other Latin American countries.
According to recent WTO statistics, the pace of new antidumping, countervailing duty, and safeguard actions against imports is slowing. However, the number of complaints against quotas applied on exports is likely to increase due to the prevailing shortage of raw materials.