By , 2008-03-08 04:32:18
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Due to the constant skyrocketing of international shipping charges and sharp price rise of iron ore in the recent two months, Chinese steel industry will face an unprecedented challenge in the new rounds of price negotiations in fiscal 2008, and the signs of a price rise can be found everywhere. However, some experts point out that , instead of panicking, we can do something like bringing the steel export under control and cutting down steel imports to make an good condition for the negotiations.
The volume of Chinese steel exports is expected to reach 68 million tons this year, accounting for nearly 15% of the world¡¯s total. According to some insiders, there are two factors behind the excess exports of steel. First, the global market has a strong demand, which, in turn, draws the price higher and higher. Besides, because the surplus of domestic steel capacity is on the rise, the profit originated from exports is far more than that of domestic market. Nevertheless, the excess exports of steel have become a double-edged sward for us, to which must be paid enough attention. On the surface, the mass exports in the short term can reduce the pressure caused by our domestic steel market, while, on the other hand, duo to the huge exports from China, the domestic demand of iron ore is increasing greatly, which, in turn, leads to the constant price rise in the global market.
In recent years, faced with the global iron ore market, our steel companies see smaller and smaller leeway, but, instead, find the pressure of price rise greater and greater. Currently, the global suppliers willfully drive up the price, taking the advantage of their big share of the market, and plus, the chargers of international shipping are also increasing in an unhealthy manner.
Lately, a forecast from International Investment Bank said China¡¯s demand of iron ore in 2010 will reach 457 million tons, making the situation of supply intensity hard to be improved in the coming 5 years. Despite of the robust expansion of capacity in domestic steel companies, almost 50% of iron ore is imported from other countries. If the expansion momentum keeps growing at 10%, any predication that the steel supply overpasses demand or the iron ore price is bound to decrease will find on ground to stand.
According to some analysts, the increase of steel exports is an important factor driving the liberation of domestic steel capacity, and the export volume should be restricted to the 10% of the total output. However, the estimated steel export of this year is around 51,60 million tons, far more than the bottom line of 10%. In fact, the steel exports activity of
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