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CISA Advises Controlling the Amount of Iron Ore Import

August 5, 2008

BEIJING, Aug. 5 /Xinhua-PRNewswire/ — China Iron & Steel Association said the traditional price mechanism has suffered greatly because of the this year’s negotiations. In CISA’s mid-year report, it said the 2008 negotiation for price of iron ore ( http://www.tootoo.com/w-Minerals_Metals_Materials/22000000-1-/ ) is facing lots of difficulties and disadvantages, because there are two different prices and two kinds of ocean freights in the iron ore import business, in addition to a great demand for iron ore.

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A CISA official said, “The fast increase of price and ocean freight has threatened the smooth development of China’s steel and iron industry. What should we do to solve this problem? We should make long-term countermeasures. At present the best method is to control the amount of ore import, thus to control the fast increase of steel and iron.”

CISA has advanced three suggestions to restrict the fast increase of iron ore. One of them is to encourage steel companies and district companies to look for more potential mines and increase production, because there are lots of unexploited mine resources in China. Some of them are not exploited because of the low prices.

Separately, mineral information in Tootoo.com ( http://www.tootoo.com/ ) demonstrates that the manufactured iron ore production has increased about 34 million tons in the first half year, it not only satisfies the contemporaneous requirement for pig iron increase, but there are still more than 6 million tons left. The amount of ore import is decreasing, not increasing.

CISA also suggests that the national steel mills have to strictly control the export of rolled steel, especially the low-end products, to moderate export high-end products. The price inversion of the at-home and abroad steel are raising the price of ore and ocean freights, it is also harmful for the present situation. If the profit per ton of steel ( http://www.tootoo.com/buy-steel/ ) is 600 Yuan, China can only attain 42 billion Yuan because the annual export is about 70 million tons. The price per ton has increased more than three hundred, so China will lose about 120 billion if we import 40 million tons of iron ore, not including the raised ocean freight. The CISA also advises that steel mills have to improve the steel quality and control the total amount.

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