LONDON, July 22 -- Chinese steel production and iron ore imports are likely to be slightly lower in the second half of the year as the country focuses on consuming domestic production to save costs, but the drop should be temporary, said South Africa-focused iron ore miner Kumba Iron Ore Ltd. (KIO.JO) Thursday.
"Chinese steel production and iron ore imports are expected to be marginally lower in the second half as Chinese steel mills prioritize cost over productivity and therefore focus on the use of domestic iron ore, alongside the slowing recovery in traditional markets," Kumba chief executive Chris Griffith said.
He said Kumba is still on track to increase production volumes by 5% year-on-year.
Griffith also said that it continues to be a transition year in terms of iron ore pricing and that a gap remains between current index prices for iron ore and the quarterly benchmark prices for the third quarter.
"Continued uncertainty exists around the future export iron ore pricing mechanism and price levels for the rest of 2010," Griffith said.
Kumba is 63% owned by Anglo American PLC (AAL.LN).