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China iron ore import surge caused by fake demand
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Tuesday, 14 Apr 2009
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Reuters reported that China's iron ore imports surged in February and March because of fake demand brought about by stockpiling and they are likely to fall off over the rest of the year.

Mr Liang Shuhe the vice chairman of the Ministry of Commerce's Foreign Trade Department said "The increase in steel production in January and February didn't lead to an increase in demand, but all ended up in inventories. He said that in response to the "fake demand" at the beginning of the year, China's steel mills and traders made the mistake of increasing their orders for iron ore, leading to record imports in February and March.”

Mr Liang said "In February some of my foreign contacts told me that China's steel market wasn't doing badly but was actually a sign of weakness. He said that when steel output capacity falls later in the year, the demand for iron ore will also fall."

Iron ore has been backed up at China's ports for months, with little sign of demand running down the stockpiles. That has set a gloomy background for annual price talks between China's Baosteel and the top iron ore suppliers Vale, Rio Tinto and BHP Billiton.

(Sourced from Reuters)

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