It is reported that iron ore market has always been an important part of steel market. In recent months, supply demand relationship in iron ore market is quietly changing. Domestic crude ore output has witnessed significant increase while iron ore import volume has observed continuous decline.
According to China National Bureau of Statistics, China crude ore output in August 2010 totaled 99.57 million tonnes up by 28.46%YoY hitting the second highest level on record. By conversion 32.67% iron content ore into 62.5% finished products and the output shall reach 49.28 million tonnes.
The development of domestic iron ore industry has always been constrained due to low quality and high production cost. However, the pressure of the Big Three who push iron ore prices to rocket has created opportunity for exploitation of domestic iron mines. Since H2 this year, China crude ore output has eyed massive growth with monthly output standing at 90 million tonnes upwards. This begins to gradually ease China's dependence on imported iron ore. October crude ore output is predicted to maintain the high level.
Iron ore imports have witnessed continuous decline by volume since H2 from a level of 50 million tonnes in H1 to 40 million tones in H2. China August iron ore imports have reached 44.61 million tonnes up by 0.1%YoY. China iron ore imports and domestic crude ore production are showing a negative relationship in regard of trends which have become more evident since H2.
Iron ore demands remain stable amid volatile iron ore prices. August outputs of steel, pig iron and crude steel in China are 69.68 million tonnes, 48.84 million tonnes and 51.63 million tonnes respectively up by 11.54% YoY, 0.92% YoY and 1.13%YoY.
Demand growth of iron ore has slowed down currently, as the foundation of steel price boost has not been firmed enough. Taking domestic iron ore production and imports into consideration, overall supply of iron ores is relatively abundant.