(People's Daily Online, Oct 26, 2006) Chinese industry insiders say that China's imports of iron ore -- after several years of sharp rises -- will only rise moderately this year. But major suppliers at a symposium held in East China's Shandong Province were expecting to export more to China.

Luo Bingsheng, vice chairman of the China Iron and Steel Association (CISA), said at the symposium that, after a sharp rise in China's iron ore imports in the past five years and given the rapid growth in the supply of domestic iron ore, imports will grow at a slower pace this year.

China saw average annual growth of over 30 percent in iron ore imports in the period 2001-2005 with import volume reaching 275.26 million tons in 2005.

China has taken steps to boost domestic production of iron ore.

According to the National Bureau of Statistics, China produced 406 million tons of crude iron ore in the first nine months, up 37.7 percent on the same period of last year. Domestic supply outstripped both steel output and iron ore imports in the period.

Market observers said the ability of China-produced iron ore to penetrate the market will be critical to future price negotiations on imported iron ore.

But they warned that the equipment and technology of some domestic steel enterprises depend on imported iron ore and this represents a major difficulty for domestic iron ore producers.

The symposium is regarded by many insiders as a warm-up for the next round of international iron ore price negotiations, a critical event for industry players such as Shanghai-based Baosteel and the world top three iron ore providers Australian BHP Billiton, Rio Tinto and Brazilian Companhia Vale do Rio Doce (CVRD).

A CVRD delegate said that given the tension concerning future supplies of iron ore, the company plans to further expand its output.

BHP Billiton said that China still has a big need for iron ore so the sharp rise of China-produced iron ore will not be a threat to their exports.

Rio Tinto predicted that China's imports of iron ore will continue to grow strongly because it is not clear whether domestic iron ore output can continue to surge.

Sources with Baosteel said that a new round of annual iron ore price negotiations will begin next month.

In earlier communications, CVRD said they were looking forward to a three to five percent or five to ten percent price rise next year. But Baosteel said they were expecting a lower price.

Brazilian expert Roger Downey said that China was outraged by the massive price hike last year, and may take the lead in trying to reach an acceptable price agreement with major iron ore suppliers this year.

The CISA intends to take the negotiation step by step, said Luo Bingsheng.

source:People's Daily Online