IRON ORE:

Iron ore imports hit lowest monthly level for six months:

China's iron ore imports fell to their lowest level in the last six months in June, according to the China General Administration for Customs (CGAC).

The total amount of iron ore imported last month was 26.9 million tons, down 6.37 percent on June last year, and 2.61 percent on the previous month.

The total volume of iron ore imported this year will reach 367 million tons, said Luo Bingsheng, deputy chief of the China Iron and Steel Association (CISA), at a recent industry meeting in Beijing. This figure still surpasses the earlier forecast of 355 million tons by CISA.

The average price of imported iron ore in June was 84.03 U.S. dollars per ton according to CIF, up 42.9 percent on the same period last year. The average price of that from January to June soared by 21.7 percent.

Last December, China's largest steelmaker Baosteel reached an agreement with Brazil's Companhia Vale do Rio Doce (CVRD), the world's largest iron ore supplier, on a 9.5-percent price rise. It also agreed on the same price increase with two other iron ore giants, BHP Billiton and Rio Tinto.

Members present at the Beijing meeting said the hike of the iron ore CIF price was mainly triggered by the rocketing ocean freight rates due to the shortage of international shipping capabilities. The world's three iron ore giants and some financial institutions manipulating the Forward Freight Agreement (FFA) was another reason for the price hike.


Iron ore prices to stay steady:

Long-term iron ore prices are not expected to see big ups and downs in the coming year, insiders said as negotiations between Chinese buyers and the world's major suppliers began.

Shanghai's Baosteel Group Corp has begun early discussions over the contract price for iron ore next year with Brazil's Companhia Vale do Rio Doce (CVRD).

Qi Xiangdong, deputy secretary-general of the China Iron and Steel Association was quoted by foreign press as saying he expects iron ore prices to change only by "a small margin" next year.

Investment banks, including Morgan Stanley and Daiwa, predicted the prices will go up 5 to 10 per cent while Citigroup and UBS expect the price to decrease by 5 to 10 per cent.

The Chinese side argued iron ore prices, which have increased 70 per cent in 2005 and 19 per cent this year, are irrationally high.

China is diversifying its sources of iron ore imports by increasing imports from India and increasing production at home to minimize dependence on iron ore from Australia and Brazil.

China's imports of iron ore will total 320 million tons this year, indicating annual increase will slow to around 10 per cent, predicted the China Steel and Iron Industry Association.

Luo Bingsheng, vice-president of the association said in earlier interviews that China's demand for imported iron ore will continue to drop slightly.

The country's iron ore imports increased over 30 per cent in average annually in the past five years.

Sixteen major steel manufacturers and China's largest two iron ore traders, China Minmetal Corp and Sinosteel Corporation, are reportedly being included in the negotiating body next year. The report was confirmed by an unnamed official with Sinosteel, but he said China's negotiating body with miners will still be headed by Baosteel.

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