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40% of the first quarter of small and medium steel price hikes of imported iron ore prices to stop

    Uncontrolled price hikes of imported iron ore, making more and more domestic steel prices have stopped importing iron ore.

    April 26, Baosteel Group Chairman Xu Lejiang told this reporter that small domestic use of imported ore blast furnace has been stopped due to high imports of mine has hit the bottom line profits.

    Reporter from the China Iron and Steel Association (CISA) was informed that, as profits continue to be compressed steel prices, swing chain more and more companies will choose to stop imports of iron ore.

    Mr Xu told this reporter that this year, the profits of China's steel prices ore imports continue to be high compression,iron chain the current miners and steel enterprises in the industry, such very uneven pattern of profit distribution is against the law and is not sustainable.

    Mr Xu said that the first quarter of this year, focusing on the profitability of steel companies is only about 3%, a considerable number of steel prices reoccurrence loss quagmire.

    Small and medium sized steel enterprises stopped buying.

    Since the beginning of this year, although the price of steel has been warmer, but because iron ore prices rose far more than steel prices, which makes the profitability of domestic steel companies to further reduce space.

    NDRC statistics show that the first quarter of this year, steel prices rose about 17%, iron ore prices rose 40%.

    Wu An, Hebei Iron ore imports, a responsible staff told our reporter, from March, the company compressed imports in favor of stocks.

    The source said that if iron ore prices continue to rise, stop the share will increase the amount because "the production also lose money than the cut-off."

    Mr Xu told this reporter that, at present, stop buying imported ore mainly for the small blast furnace steel mills, but the blast still continue to purchase, therefore, to stop the procurement volume is not large.

    Led to stop buying imported ore port stocks lower. According to the "Xinhua - China's iron ore price index" test, as some small steel mills have stopped procurement of foreign high-grade resources are at a low level of domestic stocks.

    Iron ore prices have also been affected to some extent. This reporter learned from the Rizhao Port, China 63.5% grade iron ore prices went down, wait and see mood strong.

    In fact, many government officials and steel enterprises in the industry to stop sourcing manager called for action to resist the imported ore miner's price behavior.

    Qi Lin Deng, general manager of Wuhan Iron and Steel Group, told this reporter that the best way to resist price increases, that is, to unite the country while steel prices are not imported iron ore, to the time the price will naturally drop down.

    In theory, China accounts for half of the international iron ore demand, the collective share of the miners stopped against self-evident. Australia, for example, iron ore has become Australia's largest export commodity, business cooperation between China and Australia is the core of China's demand also contributed to Australia's trade volume to rise significantly.

    However, market participants believe that the coming season steel demand, steel prices may be re-procurement of imported ore, that time, iron ore prices will be re-pulled.

    Chain increased risk.

    In a tight market situation, industry, transfer of profits to the supplier is an objective phenomenon, but the market's economic development experience has shown that this shift is not endless.

    Over the past decade, the global steel industry chain mainly around the main line of supply and demand of iron ore commenced thrilling game, iron ore, a variety of professional and popular metal, suddenly become a hot commodity.

    The decade, the global prices of steel products 2.3 times, China imported iron ore CIF price up at least 7 times. In 2010, industry-wide profits of steel companies in China less than 3%, even lower than current year profits of bank deposits; profit is less than the sum of BHP Billiton, Rio Tinto, CVRD in any one of three companies.

    Uneven distribution of industry profits continue to increase this year, but also by government level attention.

    CISA vice chairman Luo said before, industry profits have been squeezed to become intolerable, steel mills and mining companies is symbiotic relationship, one party dies, the other will perish.

    Mr Xu, told reporters that the risk of the industry chain will have accumulated to the extent of the release. In addition to being deprived of almost all the needs of profit margin, the upper reaches of the investment risk of iron ore also increased.

    Capital has a natural profit-driven. In recent years, investment in iron ore, attracted by high returns in ensuring security of supply of resources under the banner of the domestic steel industry and non-steel business of iron ore on a large scale investment in a short time the emergence of a large number of mining enterprises.

    Xu Lejiang that blind investment in iron ore resources will bring new risks, because the iron ore will not be consumed like oil, will continue to preserve the planet, the future of China's industrialization after the end of the large demand for iron ore moved to the scrap.

    However, the mining companies seem to be as worried about less than iron and steel enterprises. Australian iron ore company FMG executive director of Health RussellScrimshaw that China's demand for iron ore promising.

    Australia's fourth largest iron ore supplier, Atlas CEO DavidFlanagan argue that there are a lot of projects delayed production of iron ore, iron ore surplus will be delayed, the current market situation very well.

    Investment in iron ore, steel prices in the debate.

    Steel prices in iron ore prices almost equal to the context of bottom line, the domestic steel companies began to invest heavily in the mine, get enough interest in the share of foreign steel companies as most of mine are related to the important task of corporate life.

    Mr Xu proposed a different point of view, he believes that large scale investment in iron and steel enterprises upstream resources, and some companies even propose to 100% control of resources to achieve the purpose, which is "against the practice of economic development law", its essence is dissatisfaction with the current status of the industry chain as a "overkill."

    Baosteel Wuhan Iron and Steel Brothers Company is constantly in recent years to increase resources by investing in the upstream industry self-sufficiency rate, which, Qi Lin Deng, general manager of Wuhan Iron and Steel had bluntly, this is the Wuhan Iron and Steel "by miners forced to."

    "I always thought that iron and steel enterprises to participate in upstream raw materials with the principal objective is to strengthen ties with the upstream business, formed the industrial chain of fixed, investment income is a secondary objective, balanced raw material price risk." Mr Xu said.

    But Mr Xu ties in favor of iron and steel enterprises through the capital on a modest investment in the upstream industry, which can increase the trust between enterprises.

    Mr Xu has even proposed a implementation of the recommendations is extremely difficult - shares of Chinese steel companies mining companies, mining and steel enterprises in order to achieve two-way between the capital bonds. The reason why this proposal is difficult to achieve because the government has not liberalized the domestic steel industry's investment in China. Not long ago, in a seminar organized by SASAC, the State-owned system, officials from the steel mills and to discuss the conflict between miners, the shares of mining companies still oppose the major domestic steel companies.

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