Your Source for Iron Ore
Posts tagged Output
China plans to boost steel output by almost 9%
May 11th
China is expected to increase steel supply by 8.6% in 2010 to 621.5 million metric tons, according to a report from the Mysteel consultancy in Shanghai. That will occur, says a report in the official Xinhua news agency, despite an expected increase in domestic prices caused by increased costs of iron ore, coking coal and other steelmaking ingredients.
The need for more steel stems from the multi-billion-dollar, multi-year economic stimulus package that has boosted production of such steel-bearing products as agricultural machinery and equipment, infrastructure construction materials, environmental protection equipment, motor vehicles and emission-reduction equipment. Since the construction of these key projects usually lasts for three years and longer, Xinhua says expanded consumption for such raw materials as steel will continue in 2010 and 2011.
Meanwhile, the Chinese central government has forecast that China’s economy as measured by gross domestic product will grow by between 8% and 10% in 2010. Some private economists put the figure even higher, at more than 10% since Li Yizhong, minister of the China Ministry of Industry and Information Technology, has announced fixed-asset investment growth of 22% this year.
So, with demand for steel expected to boost production in 2010, the China Iron and Steel Association (CISA) expects foreign iron ore miners to call for a 20-30% increase in benchmark iron ore prices in 2010, the official China Securities Journal has reported. This forecast is in line with current market expectations as analysts have said the 2010 Asian benchmark price might inflate on Chinese buys.
However, Luo Bingsheng, vice-chairman of CISA, tells the newspaper that the proposed price rises would \”complicate negotiations” with Rio Tinto and BHP Billiton of Australia and Vale of Brazil. China and the three major seaborne ore suppliers have been at odds for more than a year and actually never settled on a 2009 contract price. Instead, CISA members bought from the three mining firms on spot deals.
Meanwhile, Reuters is reporting that India’s 5% iron ore export tax hike may “tempt Chinese buyers back into a loveless annual relationship with the big three miners,” in preference to the uncertain supply and volatile prices of the spot market. As has been reported on Purchasing.com, India\’s boost of the export taxes on iron ore likely will add $4-$5 a metric ton to the cost of Indian iron ore. Indian exports most of its iron ore to China, which already has been accumulating inventories ahead of 2010 price negotiations with major iron ore miners in Australia and Brazil.
Provided By: http://www.frbiz.com/
Rio to Cut Iron Ore Output 10% as China Demand Slows
May 11th
Rio to Cut Iron Ore Output 10% as China Demand Slows
Rio Tinto Group, the world’s second- largest iron ore exporter, will cut output at its mines in Western Australia by 10 percent because of reduced demand from steelmakers in China (cnmining), following the lead of bigger rival Cia. Vale do Rio Doce.
“This reduction is a prudent move to align production with revised customer delivery requirements in the light of the fourth- quarter drop in Chinese demand,” Tom Albanese, chief executive officer of the London-based company, said today in a statement.
Slowing economies have slashed steel demand, damped prices and in October made mills unprofitable in China, the biggest maker of the metal. BHP Billiton Ltd., the third-biggest exporter of the ore, so far has declined to cut its production or curb expansion.
“Rio is facing reality and I think BHP will inevitably have to say something,” Peter Arden, an analyst at Ord Minnett Ltd., an affiliate of JPMorgan Chase & Co., said from Melbourne. Rio’s cuts will reduce earnings “quite significantly”, he said.
Rio Tinto’s shares rose 8.5 percent to A$78.16 at 12:01 p.m. Sydney time. BHP’s shares rose 7.4 percent.
China yesterday pledged a 4 trillion yuan ($586 billion) stimulus plan to prop up growth as the world heads towards recession. The funds will go toward low-rent housing, rural infrastructure as well as roads, railways and airports.
“This will be a short, sharp slowdown in China, with demand rebounding over the course of 2009, as the fundamentals of economic growth remain sound,” Albanese said in the statement.
Fortescue ShutdownFortescue Metals Group Ltd., Australia’s third-largest iron ore exporter, said today it’s bringing forward a planned shutdown of its port and mine processing plant, reducing production this year by about 10 percent. More normal conditions are expected for next year and beyond, the Perth-based company said.
The world’s largest producers of aluminum, iron ore and steel are cutting output and reviewing investment plans. Brazil’s Vale began iron ore output cuts last month and doesn’t expect a market recovery until next year.
“We have no plans to cut production,” BHP spokesman Peter Ogden said by phone from Melbourne today.
Shipments from Rio’s mines will also be reduced to be between 170 million metric tons and 175 million tons in 12 months ending Dec. 31, the company said, without giving the original figure.
The company produced 145 million tons of ore from its Pilbara mines in Western Australia last year. It had forecast 2008 output of between 190 million and 195 million tons in October. Rio produced 139.2 million tons in the first 9 months of the year.
Cut PricesRio and BHP may be forced to cut prices by 15 percent next year, ending six years of gains, according to the median estimate of 11 analysts surveyed last week by Bloomberg News. BHP, the world’s third-biggest iron ore exporter, is seeking to buy Rio in a hostile $73 billion all-stock takeover offer.
“This is about as bad as it gets,” said Ord Minnett’s Arden. He expects contract prices may fall by 10 percent next year and may decline again the following year.
ArcelorMittal, the world’s biggest steelmaker, last week said it will reduce production by as much as 35 percent in the U.S. and 30 percent in Europe after prices tumbled. The Luxembourg-based company forecast earnings will slide as much as 48 percent to $2.5 billion in the fourth quarter.
Provided By: http://www.cnmining.org
