Iron ore price hikes threaten disruption of China steel market- 26 Apr 10

Xinhua reported that a senior Chinese industry official has warned major iron ore producers that huge price hikes are likely to damage China's steel market and relations between iron ore and steel producers.

Mr Zhu Hongren chief engineer with the Ministry of Industry and Information Technology said China's steel mills were under great pressure from soaring iron ore prices, which were expected to erode profits.

He said that price hikes in iron ore would lift costs for Chinese steel makers and dampen their profitability, given their heavy reliance on iron ore imports.

Mr Zhu said raising steel prices would only soak up some of the cost and the steel-consuming sectors would not stand continuous price increases.

He hoped the two sides of iron ore trade would take the interests of both sides into consideration when resources saw big price gains, adding that asking for higher prices would hurt downstream business and the long-term stability of the relationship.

Mr Zhu said the steel industry also faced problems of overcapacity and outdated production capacity, calling for domestic steel firms to accelerate the closure of outdated production capacity and industrial restructuring to increase competitiveness.

Apr 26, 2010 09:37
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