BEIJING (Scrap Monster): The iron ore imports by China are set to rise sharply as more local mines are on the verge of closure owing to high operating costs. The percentage share of global iron ore supply by the country is likely to increase from 67% to 70%.
The iron ore prices have dropped considerably since December last year to touch six-year lows. The prices have plunged 55% from the highs of $191.70 per ton in February 2011 to as low as $86.09 a ton this Wednesday. According to analysts, the prices are expected to drop further, mainly on the back of rising surplus production and weakening demand growth. The increased production from Australia and Brazil is feared to double the iron ore surplus in the global market by 2015.
The top producers are aiming increased shipments to Chinese ports, as domestic output is predicted to fall by at least 15% to 282 million tons in 2015. Almost one-third of coastal mines in the country have shut their operations due to high costs.
The top global iron ore producers have already announced plans to boost their shipments to the country. Lower output costs have facilitated these companies to up their production despite record fall in prices.
Rio Tinto plans to increase their iron ore output by nearly 11% in 2015. Other major suppliers like Vale and BHP are eyeing 8% to 9% rise in production during the year. Fortescue plans to boost its iron ore shipments by nearly 25%. The companies expect that the revival in Chinese steel sector demand will boost raw material demand.
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