Posted on 22 Sep 2008
As the world`s three-largest producers of iron ore are moving to raise the prices for their products to be shipped in the first quarter of 2009, domestic steelmakers, including China Steel Corporation (CSC), will see profit margin slashed and have to find ways to reduce production costs.
Iron ore is one of the most important raw materials for the production of iron and steel products.
An industry analyst noted the prices for iron ore will rise approximately by 50% in two years if the world`s three-largest producers of the material raise the prices of their products in 2009. The price hike in iron ore will undermine the profitability of steelmakers and shipping firms as well, because the world demand for steel products will decline in the wake of the price hike in material.
At present, steel billet is quoted at US$750 per metric ton, down sharply from US$1,200 a few months ago, which has dimmed transaction of steel products internationally. As a result, the world demand for steel products is destined to weaken in the next few months and steelmakers will find it difficult to raise the prices for their products.
There is a rumor that some of the world`s largest producers of iron ore are using industrial accidents to suspend production lines in an attempt to sustain the prices of their products.
A CSC executive said the current market order is deviated from normal situation, but the steel market will go back on the right track in a longer period of time.
