Ministry of Land: Prices of Minerals to Keep Rising in 2010

BEIJING, Jan. 8 -- Affected by many factors, prices of minerals will keep rising in 2010, according to a report on Supply and Demand of Minerals by Research Group of State Land and Resources Economic Institute released on website of Ministry of Land.

According to the report, investment climate in 2010 may not as good as that of 2009 due to industrial adjustment in downstream industries like iron and steel, cement, and chemical industries, as well as production resumption in Shanxi province and capacity expansion in other regions. Risks of overcapacity at coal industry are expanding, and fluctuation of coal prices is inevitable.

Meanwhile, the Central Government will definitely impose taxes on traditional energy sector in order the cut emission and save energy. It is believed that, supply of coal will be ample in 2010 due to production resumption in provinces of Shanxi and Inner Mongolia, and due to the fact that producers in Shaanxi province will not give up their market shares easily. Profit of coal industry will be squeezed when resources taxes are imposed on coal industry.

The report also says that with major economies in the world showing recovery, prices of major minerals like copper and aluminum are advancing robustly. Demand of copper will grow by 5.6% in 2010, and prices of copper are expected to advance by 30-35%. Development of real estate and automobile industries is the major driving force behind the growing demand of aluminum, and demand of aluminum is expected to increase by more than 10%.

According to data from Ministry of Land, output of nonferrous metals reached to 21.4 4 million mt from January to October in 2009, up 1.3% from the level in 2008. Output of nonferrous metals was 2.53 million mt in October of 2009, up 16.3% from the level in 2008. 

The report also says that demand and supply of crude oil will grow further in China in 2010. With prices of international crude oil climbing steadily, imports of crude oil will be curbed to some extend, and supply of crude oil may hard to meet market demand. Recently, many oil traders believe that prices of oil will bullish this year.

As to the iron ore market, it is believed that as real estate industry gradually recovering, output of iron ore will further increase due to increasing demand of steel. It is expected that prices of international iron ore will rise in the 10%-20% range, and prices of domestic iron ore will rise further. It is believed that, under strong demand from domestic market, iron ore producers in India will raise prices of iron ore, and BHP Billiton and Rio Tinto in Australia may establish joint ventures, which will make China’s negotiation of iron prices in difficult situation.