Xu Lejiang, president of major Chinese steelmaker Baosteel Group, has stated at the 26th China-Australia Economic and Trade Cooperation Forum that the substantial amount of investment attracted by the surge in iron ore prices in recent years will lead to greater iron ore output capacity in the next few years, and this could change the relationship between supply and demand of iron ore.
Mr. Xu added that the unfair distribution of profits cannot be sustained. In the last decade, global steel products prices rose by 2.3 times, while the CIF China price of imported iron ore went up by at least sevenfold, he said. Compared with the double-digit profit growth recorded by the big three miners in 2010, the average profit margin in the Chinese steel industry was less than three percent. He said that in his view such increases as seen in iron ore prices would eventually be followed by price decreases.