China's domestic iron ore, steel trends hit markets

BEIJING, Aug.4 (Xinhuanet) -- Rising domestic iron ore production and slowing steel demand have hit some foreign miners and affected the global market, industry leaders said on Tuesday.

China's iron ore imports dropped for the third straight month to 47.2 million tons in June, while spot prices have dropped to about $122 per ton after peaking at $185 per ton in April.

The country's iron ore imports rose 4 percent year-on-year in the first half of this year, figures from the China Iron & Steel Association (CISA) showed. But domestic ore output increased by 28 percent year-on-year to 485 million tons in the same period, with output rising 37.6 percent in the second quarter from the first quarter.

"Rising domestic ore production is the main factor that drove down imports, largely impacting supply and demand on the global market," CISA vice-chairman Luo Bingsheng said.

The figures form part of the bad news for international mining companies in Australia and Brazil that provide more than half of the ores to China.

Iron ore imports from Australia, Brazil and India accounted for 62.3 percent of the country's total ore consumption last year.

Brazilian company Vale already predicted in June that the share of imported ores in China would drop this year.

About 40 percent of Chinese steel mills have to make cutbacks or put plants on maintenance, blaming increasing costs of imported ores and declining steel prices. Oversupply in the industry will continue to lower production, further driving down ore imports in the third quarter, Luo said.

The CISA will also reduce the number of licensed iron ore importers to regulate the imported ore market.

"We will announce new rules for the industry soon, which include higher standards on the environment, energy consumption and capital requirement," Luo said.