China Import to Dominate World Iron Ore Market

World largest iron ore importing country, China keeps dominating world seaborne iron ore market for 2012. Chinese iron ore import increases due to poorer domestic ore grade while Chinese ore output is increasing. The price would stay at high level despite of supply increase from Australia and Brazil when production cost in China is apparently higher than US$ 100 per tonne.

Chinese iron ore import increased by around 68 million tonnes to 686 million tonnes in 2011 from 2010. The import renewed the record for the first time in 2 years. The domestic ore output was higher than 100 million tonnes per month since May. The ore output increased by 27.4% to 1.206 billion tonnes in January-November from same period of 2010. The annualized output is very high at 1.32 billion tonnes.

However, grade of Chinese iron ore is lowering. The iron supply for pig iron from domestic iron ore is calculated at around 225 million tonnes except the supply from imported ore with 60% Fe in 2011. The domestic ore Fe content is estimated to be 17% compared with 20% in 2010.

Australian Bureau of Resources and Energy Economics expects world iron ore trading volume increases by 79 million tonnes for 2012 from 2011. The increase for 2012 is lower than 107 million tonnes in 2010 but higher than estimated 38 million tonnes in 2011. The bureau expects Chinese import will increase by 47 million tonnes for 2012.