September 08, 2008

Baosteel chairman confirms supply demand gap in iron ore

It is reported that Baosteel Group feels that iron ore supply growth is lagging behind demand because of China's very fast expansion in steel production, as it is preparing to negotiate benchmark prices with iron ore miners.

The report quoted Mr Xu Lejiang chairman of Baosteel during the Communist Party congress in Beijing as saying that “China's steel sector grew very fast but iron ore preparation is insufficient. Annual negotiations on iron ore prices will be based on demand and supply situation and iron ore mines' profitability.''

China overtook Japan as the largest buyer of iron ore in 2003 and last year Baosteel set global benchmark prices for the first time when it agreed to a 9.5% gain, the smallest increase in four years.