According to a top industry association official, steel prices will continue to remain at high levels this year with mild fluctuations, on the back of rising raw material costs and a shortage of iron ore.

Mr Luo Bingsheng vice chairman of the China Iron and Steel Association said the big three global miners, BHP Billiton, Rio Tinto and Vale are taking advantage of the global scenario of supplies falling short of demand to push for higher iron ore prices.

He said that Crude steel output from countries with large iron ore imports like Japan and some European countries rose 50.7% and 37% respectively. Steel prices will fluctuate on the higher side, despite the recent decline.

He added that steel inventories in 20 major cities declined 9% to 9.77 million tonnes by last week, while steel inventories rose 34% to 10.74 million tonnes by the end of March.

Mr Luo said the three big miners are obsessed with the idea of maximizing profits in the short term. He said that "They ignore the long term benefits and abandon the principles of a win to win situation for suppliers and buyers, adding that surging iron ore costs have squeezed Chinese steelmakers' profits.”

He added that seventy seven major large and medium sized steel mills reported a profit of CNY 21.7 billion in the Q1 down by 14.3% compared to the last quarter.

Mr Luo said China should encourage domestic iron ore miners to expand production to reduce dependence on global miners. He said that during the Q1 domestic iron ore output rose to 204 million tonnes up by 21%YoY from a year ago.

He added that China should take a lesson from developed countries who control nearly 50% of iron ore imports. It should also emulate big steel mills like ArcelorMittal which are increasing investments in overseas mining resources.

Sourced from China Daily

• [Editor:editor]