China's iron ore consumption hit a whopping 57 million tonnes (Mt) in April but a drop in demand is expected in coming months, a Shanghai-based commodities expert says.
"These are really tremendous numbers," Penfold Ltd director Joe Singer told a conference in Perth on Thursday.
Mr Singer said China was weathering the global financial crisis well and had recently lifted steel production from dismally low levels in the December quarter.
"This year, you had metal production coming back but (China's) mine production was not following, and this led to a tremendous increase in imports," he said.
But with China's iron ore inventories sitting around 80Mt and climbing, prices for the bulk commodity are coming under pressure and exports to the Asian superpower are expected to fall in the months ahead.
Mr Singer said import prices had risen due to a recent jump in freight rates, which could mean lower demand from China for Australia's iron ore.
China's now largely mothballed domestic iron ore producers would re-emerge when prices rose, he said.
The iron ore expansion plans of major miners, BHP Billiton Ltd and Rio Tinto Ltd, could potentially swamp the market and drive prices lower, Mr Singer said.
"I think demand is currently good and stable at about last year's levels but (China's) domestic mines are coming back and those rates of imports (in April) were due to re-stocking, and is just unsustainable.
"At some point, the producers should cut back and so far, we're not seeing major cutbacks around Australia.
"The big guys are ... saying `oh, the juniors are hurting the market' but it's irrelevant.
"It's insignificant in the big picture: their tonnages are so small.
"Without the rest of the world cutting back, it's hard to see how iron ore prices could stay (at current levels)."
Source: Sydney Morning Herald
No comments:
Post a Comment