Chinanews, Shanghai, Mar. 22 – The China Iron and Steel Association (CISA) and 16 Chinese steel makers announced last Friday that China wouldn’t buy any iron ore from India after it imposed export tariff on its iron ore resources. Earlier, the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters (CCCMC) also convened a meeting discussing possible measures that could be taken in response to the new tax, the Shanghai Securities Journal reported.
China's pig iron production this year is expected to reach 445-447 million tons, 46-48 million tons more than last year. In order to reach this goal, production of iron ore should increase by 65-84 million tons. If China can increase the production of crude iron ore by 20% this year, then 700 million tons of iron ore can be made at home, which is 117 million tons more than last year. If the original iron ore is converted to finished ore of grade 65%, it turns out that China's iron ore production in 2007 will be 55 million tons. The deficiency will be made up by import.
In the past, China imported large amounts of Indian iron ore due to its low cost. When India iron ore was cheaper than Brazilian and Australian iron ore, some small or middle-size steel makers in China tended to buy iron ore from India, since this would reduce their production cost. Last year, the amount of Indian iron ore accounted for 22.92% of China's total import. Most of the Indian iron ore was bought by steel makers in the coastal regions, especially by the small and middle-size steel makers in the middle or southeastern part of China. Since there were insufficient iron ore resources in these regions, and small and middle-size steel makers in these regions were not able to sign purchase contracts with large iron ore suppliers, they would have to rely on India for its iron ore resources.
The export tax imposed by India will affect the above-mentioned steel makers most. Some steel makers say that since India iron ore is not cheap any more, such low-grade iron products will no longer appeal to them any more. These manufacturers are starting to look for some new iron ore resources in other neighboring countries.
