Iron ore demand shows an upward trend

Iron ore demand shows an upward trend

According to recent market reports, Rio Tinto and BHP Billiton, major iron ore producers of Australia, may build an additional four month stock of iron ore as a result of rising demand from China which increases prices in Japan and other markets. Chinese ore imports have shown an upward trend in the first eight months as its local steel mills increased production to supply the country's builders and automakers. Iron ore buyers such as Nippon Steel and JFE Holdings and other Japanese steel producers have to pay 12.5% more in 2004 to join into competition for supplies. Iron ore prices are expected to rise by around 10% to 13% in 2004. New iron ore producers are planning to develop their mines in Australia due to increasing iron ore prices. Iron ore exports are forecasted to reach A$ 6 billion by June 30, 2004. Production which is going to start at new mines may prevent iron ore gains in the future as output increases with demand. Five new mines are going to start operation during the next four years in Brazil and Australia, including $1.5 billion Hope Downs mine in Western Australia. BHP and Rio are aiming to increase iron ore capacity by 2005 to meet the rising demand from China.