China, the world’s biggest iron ore buyer, may import as much as 14 percent less of the steelmaking raw material this year as domestic production increases, according to the China Mining Association.
Imports may be between 590 million metric tons and 650 million tons this year, Wu Rongqing, the chief engineer of the association, said today at a conference in Beijing. Last year’s imports were 686 million tons, according to Bloomberg calculations based General Customs data.
Higher iron ore prices and rising competition have cut profit margins for Chinese steelmakers to a record low of 0.43 percent in November, according to the China Iron and Steel Association. Ore prices rose for a sixth straight day yesterday after China’s central bank cut reserve requirements by a half- point on Feb. 18, spurring lending.
The price of ore with 62 percent iron content delivered to the Chinese port of Tianjin added 1.1 percent yesterday to $140.5 a ton, according to the London-based information provider The Steel Index Ltd. The prices slumped to $116.90 per ton on Oct. 28, their lowest level since December 2009.
Domestic iron ore miners may produce as much as 591 million tons of concentrates this year, or 1.55 billion tons in ore, Wu said at the conference. Last year, China produced 1.33 billion tons of ore, he said.
Iron ore prices may trade between $110 and $130 a ton this year, Wang Xiaoqi, vice chairman of China Iron and Steel Association, said at the same conference this morning.
China’s iron ore imports gained 11 percent last year to a record, after dropping 1.4 percent in 2010, customs data showed. China may have a total steel production capacity of 870 million tons this year, with demand expected to be only 700 million tons, he said.
Separately, Vale SA (VALE3), the world’s second-largest mining company, is still in talks with ports, including China, on the acceptance of its very large ore ships, Luiz Meriz, China president of Vale, said at the same conference.
“So far the talks are positive”, Meriz said, without elaborating.
China on Jan. 31 tightened rules for ports that handle very large ore ships and oil tankers to ensure safety standards, restricting Vale’s plans.
The global iron ore industry needs to invest in a “huge amount” of resources to replace lost production capacity, Vale’s Meriz said. Mine expansions faces challenges including high costs and lower quality of ore, he said.