Home / Metals / Steelhome’s Wu Says: China Isn’t Ready for Iron-Ore Deficit
Stainless Steel Flanges

Steelhome’s Wu Says: China Isn’t Ready for Iron-Ore Deficit

China’s steel industry isn’t prepared for a looming shortage of iron ore, the metal used to make the building material that last week rose to its highest price in almost five years, according to a prominent industry adviser in China.

Prices will “absolutely” continue to increase as mine closures in Brazil spur a market deficit in the second half of the year, Wu Wenzhang, founder and president of Shanghai Steelhome Information Technology Co., said in an interview Saturday. Iron-ore prices surged to the highest since July 2014 at $95.90 a ton on Friday, according to Mysteel data.

“They don’t realize what’s going to happen,” Wu said on the sidelines of Steelhome’s conference, which attracts about one thousand delegates from around China. Disruptions will amount to 60 million tons of lost supply this year, according to his “conservative” estimate. “The only thing we can do is try to convince the steelmakers to believe what could happen with iron-ore supply, and to prepare for the upcoming shortage.”

The global iron-ore market is reeling from a late-January dam breakdown at a Vale SA operation that left more than 200 people dead and triggered a sweep of mine closures across Brazil. Shipments from the South American nation are already in contraction, while Australian disruptions and signs of a demand pick-up in China’s steel needs offer a further boost to prices.

Wu said he’d be watching iron-ore stockpiles in China for signs of stress, with a slide below 100 million tons likely to trigger “devastating” price volatility. Port stockpiles totaled nearly 150 million tons on April 5, according to Steelhome’s own data. The safe minimum is about 120 million tons, Wu said.

Other comments from Wu:

Iron-ore mines in China have limited capacity to plug any supply gap, given environmental constraints and high costs. If prices stay above $100 a ton, China miners may ramp up production.

China’s steel prices will continue to rebound into the second half of the year as the economy stabilizes and demand recovers but average prices over the year will be lower than 2018. Wu noted that the nation experienced solid credit growth in the first quarter.
Steelmakers in Europe and the Middle East will be in a worse position than China in the event of a serious, prolonged shortage from Brazil.

Source: Bloomberg

Yaang Pipe Industry Co., Limited (www.yaang.com)

About NCTV

www.yaang.com provide a wide range of steel products as Steel pipe, Steel pipes and seamless pipes, Alloy pipes, Pipe fittings, Composite steel pipe used in the industry, construction etc.

Leave a Reply

Your email address will not be published. Required fields are marked *

*

Scroll To Top