Most of large Chinese steelmakers are basically buying contracted iron ore under the quarterly pricing reached by three miners and Japanese & South Korean rivals, said some steel mills to China Business News during the sidelines of 6th Steel Development Strategy & Supply-Demand Forum held by SteelHome.
Some mills in Japan and South Korea have signed the agreement with Brazilian Vale to offer USD 110 per tonne in buying contracted ore, up 96.4% over the 2009 deal. Chinese steelmakers haven''t formally inked the contract, but they mainly bought the ore for April to June under this deal.
Mr Li Jianshe Marketing Sector Manager of Maanshan Iron and Steel Co said the price of metallics ran faster than steel market, and domestic steel mills would face up with a big risk if iron ore price continued climbing up. He also disclosed that once Chinese steelmakers bought imported iron ore at the price of USD 175 a tonne, no margin would be got.
Mr Li said the withdrawal of loose policies, received assets risk and US''s economic recovery would push up US dollar index, which as a result would cause a drop in commodity prices, 2010 steel market would have a better performance than 2009.
Mr Wu Wenzhang, General Manager of SteelHome, made a projection on steel market in the remainder of 2010: steel price to continue climbing up in Q2; H2 price to have a volatile performance but expected to be higher than H1.
Mr Wu also made following prediction: steel enterprises have the ability to pass on high production cost, and the margin this year was said to exceed 2009; Chinese steel demand would remain the uptrend during 2010-2012; global metallics supply would present periodical tension; China''s crude steel consumption would reach 600 million tonnes to 610 million tonnes this year, up around 12%YoY, crude steel production would hit 630 million tonnes, up 9.4%, net steel exports would be 20 million tonnes; iron ore imports in the whole year would gain 8.4% to 680 million tonnes.
Mr Li Xinchuang Head of China Metallurgical Industrial Planning and Research Institute said on the conference that China''s crude steel production was expected to rise 10 percent, real consumption would increase 50 million tonnes and steel exports would augment 35 million tonnes.
The data from China Iron and Steel Association showed that China daily output of crude steel and pig iron was 1.7985 million tonnes and 1.6965 million tonnes in February, equivalent to 650 million tonnes and 619 million tonnes in the whole year.