According to a statement regarding the overall situation and underlying problems that China's steel industry issued by the China Iron and Steel Association (CISA), in the first half of 2009, super-high iron ore import volume pulled up iron ore prices and shipping freight costs, creating new difficulties for enterprises.
"The super-high import volume of iron ore has seriously affected the trading order of iron ore imports. During the first six months of 2009, China imported 297 million mt of iron ore, among which 166 million mt was imported by steel mills, up 9.65 percent year on year; while traders imported 131 million mt, up 90.43 percent," CISA said in its statement.
CISA noted that the proportion of iron ore imports by traders jumped up to 43.96 percent of the total compared with the 29.83 percent of the same period last year. The additional 40 million mt of iron ore imports during the January-May period was caused by iron ore traders.
"The super-high import volume of iron ore firstly contributed to the soared shipping freight costs, bringing great cost pressure to enterprises," CISA added.
In early July, the freight charges of Brazilian ore have surged from $8.85/mt by the end of 2008 to $45.6/mt and the freight costs of Australian ore have risen to $16.6/mt compared with the level of $5.5/mt during the end of 2008.
CISA statement continued, "When steel prices were still at low levels, shipping freight costs of iron ore soared sharply, which increased difficulties for steel mills to operate in the second half of 2009. Secondly, the super-high import volume also caused serious port congestion of iron ore. In mid-May, total iron ore inventory at ports was above the level of 70 million mt. Thirdly, it provided raw materials for dated capacities, making it harder to eliminate dated capacities. Fourthly, it resulted in the surface prosperity of global iron ore trade, interfering the iron ore price talks. Therefore, it is a must to rectify the trading order of imported iron ore."