September 07, 2008

CISA warns temporary supply shortage of iron ore

It is reported that the China Iron & Steel Association and China Chamber of Commerce for Metals and Chemicals Importers and Exporters have recently reduced the number of licensed iron ore importers from 118 to 112.

The global supply and demand of iron ore is set to move towards better equilibrium or even oversupply in the long term. However, the supply remains fairly tight in the near furture reflected by soaring iron ore freight rates these days.

According to Mr Yang Shicheng director of development & research centre of COSCO China's iron ore import volume differs considerably from month to month which has partially contributed to the balloning iron ore shipping cost.

China's iron ore import expands 31.9% in Jan from same time of last year and the monthly growth rate continues to move downward in January to June 2007. However, the imports rebound and advances 35.91% in July but again drifts to 10.78% in August 2007.

The escalating shipping rates has also pushed up landed price of iron ore, jumping 27.56% in the first seven months of this year. However, massive steel export and robust domestic demand would translate into hectic demand for the raw material in days to come.

China Iron & Steel Association estimates China's iron ore imports to add by 44 million tonnes to 370 million tonnes in 2007. If China's iron ore import increment stays at some 40 million tonnes in 2008, that is to say, global demand for seaborne iron ore would expand by 50 million tonnes to 60 million tonnes next year.

By contrary, the leading overseas ore suppliers intend to raise up their output by some 70 million tonnes in 2008. Therefore, the supply and demand appear to be in balance at large next year. However, the industrial association warns that temporary mistach is possible due to uncertainties and monopoly held by the big three.

Mr Yan Bangsong VC of CCCMC says that from November 2007, Chinese iron ore importers must provide the chamber with details of all iron ore import contracts and sales at a recent conference on raw materials held in Ningxia.

Mr Yan told the 300 delegates that the CCCMC has been assigned by China's Ministry of Commerce to collect the information. The chamber and the China Iron & Steel Association met jointly in Beijing on September 24th 2007 to discuss the matter and the training that importers would be offered on how to use a special computer program being introduced to collect the data.

(Sourced from MySteel.net)