China Business News cited Mr Li Yizhong MIIT director as saying that slowdown growths for such industries as housing and automobile etc have lent tangible influence on steel and the construction sectors. Yet, the ministry forecast annualized industry growth rate can still meet some 13% this year.
Mr Li said industry economy continued the uptrend posted in second half of last year, but emerging of new problems including 2 month decline of MPI, housing industry curb falling auto sales volume since Apr and relatively high debt at local governments combined to hurt the demand from the industries like iron and steel, construction, chemical industry, household appliance, etc. The prices appeared to come down in the previous period.
He said swelling materials prices and raised wages are adding to the enterprises cost and making their operation harder, but the target growth for the whole industries is still to be fulfilled. He added that the six main tasks to ensure fulfillment of the growth in the second half year. As to elimination campaign, pushing forward M&A will be essential to handling the structural problem and realizing upgrading.
Mr Li pointed out four warnings
1. The world economy has yet to walk out of effects of the financial turbulence
2. Trade protectionism is getting intensified and in more forms
3. The materials prices are volatile at high levels
4. Western countries put forth new development strategies eg re industrialization, expanding export, low-carbon industry which attached importance to real industry and aim to grab the worldwide industries and top sciences and this should make us impact and attack.
Mr Zhu Hongren Chief Engineer of the Ministry of Industry & Information Technology lately stressed that China industry growth rate will slow down but would not see double dip in the H2.
Iron ore price negotiations - JP Morgan sees shorter term system
According to Mr Jeffrey Kabel executive director of global ferrous products at JP Morgan, the discrepancy between global iron ore and steel prices could lead to a shorter term pricing system than the quarterly adjustments currently used by Brazilian iron ore giant Vale and multinationals BHP Billiton and Rio Tinto.
The quarterly backward looking pricing mechanism creates a discrepancy between prices under contract and the spot market.
Mr Kabel said such differences are expected to lead to monthly adjustments for iron ore prices, which could finally move to a spot-based mechanism. He said that as a result coking coal and scrap would also move to a monthly pricing system.
Mr Claudio Alves Vale director of iron ore sales for the Americas said that so far clients have not requested the implementation of a monthly pricing model.
In early 2010, Vale implemented the quarterly system for its iron ore, putting an end to the benchmark model that had been in place for 40 years and under which prices were set for an entire year