Japanese medium reported that major Japanese steelmakers and Brazilian mining giant Vale SA are expected to reach the agreement in 2010 iron ore prices by the end of March, and the price for April-June is anticipated to rise 100 percent from 2009' s deal to USD 110 per tonne (FOB).
SteelHome believes that 2010 iron ore increase is ascribed to the sharp change in global iron ore supply-and-demand.
I Iron Ore Demand of Non-China Countries Dropped Drastically in 2009
According to World Steel Association, global pig iron production was 952 million tonnes in 2009, falling 42.42 million tonnes from 2008. Of which, China's output increased 72.65 million tonnes, in other world, the pig iron output of the other part of the world declined 115 million tonnes. Calculated on the basis of 62.5 percent grade iron ore, global iron ore consumption dropped 67.87 million tonnes in 2009 (116.24 million tonnes increment in China and 184 million tonnes decrease in other countries).
Global Pig Iron Output in 2005-2009 (10,000 tonnes)
| 2005 | 2006 | 2007 | 2008 | 2009 | 09/08 change |
Global BF pig iron output | 79976 | 87985 | 95375 | 92839 | 89826 | -3013 |
Global DRI output | 5668 | 5948 | 6471 | 6585 | 5356 | -1229 |
Total | 85644 | 93933 | 101846 | 99424 | 95182 | -4242 |
China | 34505 | 40777 | 47202 | 47110 | 54375 | 7265 |
Without China | 51139 | 53156 | 54644 | 52314 | 40807 | -11507 |
Note: the data from WSA, collected by SteelHome
II China's Iron Ore Imports Soared in 2009
General Administration of Custom of P.R.C released that China imported 628 million tonnes of iron ore in 2009, an increment of 184 million tonnes which was nearly equivalent to iron ore consumption drop in other countries. China was the largest contributor when iron ore demand cooled down in Europe and other Asian nations. In 2009, the proportion of imported iron ore use amid Chinese steel mills jumped up, and the reliance rate climbed up from 2008' s 49.5 percent to 69 percent.
The average import price of iron ore in 2009 fell 40.2 percent, compared to 2008, to USD 79.87 per tonne (CIF, China), which was converted to CNY 638 per tonne, far lower than China-produced iron ore cost.
III Global Iron Ore Demand Increment over Supply Increase in 2010
On the back of global economy recovery, world pig iron production will ascend gradually. WSA's data showed that global BF pig iron production in January gained 24.4 percent to 81.89 million tonnes, and global DRI output rose 19.5 percent to 4.92 million tonnes. Thus pig iron output total 86.82 million tonnes, composing of China 's 46.1 million tonnes and other nations' 40.72 million tonnes. It is estimated that pig iron output of Non-China countries will hit 480 million tonnes this year, a year-on-year increment of 71.9 million tonnes (which needs 115.04 million tonnes iron ore). China 's pig iron output in 2009 is anticipated to reach 600 million tonnes, up 56.25 million tonnes (which needs 90 million tonnes iron ore).
In 2010, the world will welcome the total iron ore demand increment of 205 million tonnes (90 million tonnes + 115 million tonnes). However, global iron ore supply increment will not exceed 150 million tonnes based on key miners' output expansion (130 million tonnnes) and other nations' production increase. In other word, iron ore supply increment will be around 55 million tonnes lower than the demand increment.
On the recovery of iron ore imports in other nations, China 's imports will be limited in 2010. In order to secure stable iron ore supply, China has to raise the offer to overseas miners or expects the production expansion of Chinese mines.
Shandong Coke Assn Issued April Coke Guiding Price
Shandong Coking Industry Association publicized reference advice for April: guiding price of II grade metcoke is suggested to be set at CNY 1,900 per tonne, and that of I grade metcoke at CNY 2,000 per tonne. The price will take effect from April 1.
Once the market has obvious change, the association will make adjustment.
(Source: steelhom.cn )