[ferro-alloys.com] Chinese steel companies are increasing the use of Chinese domesticiron ore on credit problem and payment edge but many insiders believe this might be the finale.

Despite the inborn weakness of high cost and low content, Chinese steel companies are increasing the use of Chinese domestic iron ore in the past years, the ratio between Chinese domestic iron ore and imported ore was around 3:7, but now the trend looks to be completely the opposite because of cash strains.

An iron ore trader said that different settlement practice also gives rise to popularity of Chineseiron ore. Buying offshore iron ore usually requires full payment but in domestic trading allows two to six months of late payment.

However, many insiders are not optimistic in the report on the outlook for Chinese domestic, saying iron ore price will be on the downward trend in the upcoming years and Chinese steelmakers are set to use more imported iron ore because of sintering, fe content and cost advantage.

Mr Yang Jiasheng secretary general of Metallurgical Mines Association of China said in April at SteelHome’s annual conference that 65% Chinese iron ore miners are below average marginal cost and only 15% fall to the cost range of USD 100 to USD 120 per MT.