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UPDATE 1-China Domestic Ore Production Cuts Imports - CISA
Aug 3, 2010 13:10CST

BEIJING, Aug. 3 -- China's rising domestic iron ore production has been driving down imports since the second quarter of this year, with the top three global miners' share of the market falling noticeably in June, a senior official of the China Iron & Steel Association said on Tuesday.

"Because of growth in domestic ore output, prices for imported ore have fallen in the second quarter, especially in June, and this has an enormous impact on supply and demand on the global market," Luo Bingsheng, CISA's vice chairman said.

China produced 101.55 million tonnes of iron ore in June, up 11.5 percent from May, and imported iron ore dropped to 47 million tonnes in June, down 9 percent from May.

Luo told a news conference the top three global iron ore miners' share of the China market fell noticeably in June.

The majority of medium- and small-scaled steel mills have halted purchasing imported ore due to much cheaper domestic ore since late April, and have sliced output when steel and iron ore prices fell sharply after China vowed to rein in overheating in the property market.

However, major big steel mills have tried to maintain production at high levels, despite expectations the steel sector's profits will fall in July from June.

Daily output from China's major steel mills fell 3 percent to 1.34 million tonnes during the middle 10 days of July from the previous 10 days, data from CISA showed.

"If China's steel overproduction will not be put under control in the third quarter, industry problems and plunging prices will persist for the rest of the year," Luo added.

China's steel prices have rebounded over the past two weeks, but are still more than 10 percent lower than the peak in April.

CISA members' steel product stockpiles rose 39.3 percent from the beginning of the year until end-June, reaching 10.3 million tonnes, CISA said.


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