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China Should Take the Initiative to Adjust Its Own Iron Ore Demand By Lanbo Jiang

  in Marketing | Published 2010-05-14 02:08:39 | 178 Reads | Unrated


Rectify the iron ore market order, so Can also take the initiative to adjust to achieve reasonable growth in Chinese demand for iron ore control and regulation goals

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Rectify the iron ore market order, so. Can also take the initiative to adjust to achieve reasonable growth in Chinese demand for iron ore control and regulation goals.Take the initiative to adjust China's iron ore demand, it should be from the curb overcapacity in the steel industry to curb local governments in pursuit of GDP to expand the production capacity of steel and iron ore to rectify market order, etc. to take measures. China's iron ore out of the current difficulties faced by the negotiations.

Conservative deadline for the global iron ore negotiations. With the deadline
approaching, April 1. In particular the international iron ore giants long association of unilateral sharp rise of iron ore prices in 2010 and foreign iron ore in negotiations or will again in dire straits. So, how to treat international iron ore giants of the sky high claims? China should take active measures to escape such negotiations conducive to the situation? These issues are worth considering.Trends in iron ore prices appears to die hard. Here, from the present situation. There may be a prominent impact of the following four aspects.

China's iron ore demand was growing rapidly. According to relevant statistical data, 1st. The current domestic iron and steel production capacity reached 660 million tons, is expected in 2009 to more than 700 million tons, the iron and steel production capacity is close to 50% of the world In addition, in 2009 China imported 630 million tons of iron ore compared with 41.6% growth in 2008 China Railway ore import volume of trade has accounted for 75% of the global iron ore trade increased by nearly 70% of the external dependence of the first of China's economic recovery, there is no cut steel output, resulting in China's iron ore demand is still very strong.

Iron ore demand in Asia and Europe to restore growth. With China's slow recovery of the economy outside of the second. Particularly in Asia and Europe, the recovery of the steel industry began to rebound in steel production needs more iron ore supply. The European Union, for example, is currently recovering from the EU's steel production, but because it had a low inventory of iron ore, complex products will definitely increase the demand for iron ore.

International investment bank took the opportunity to "make trouble," the financial property of iron ore, "the market for iron ore price fluctuations significantly. The face of China and the Chinese outside of the huge demand for iron ore, third. The international investment banks have released analysis report is expected to price of iron ore this year, the Association will continue a long sharp rise in spot iron ore prices had led to rise in spot iron ore mines at present the three CIF has already broken 150 U.S. dollars ton. Conversely, iron ore prices quick shot, but also the international investment bank speculation in the iron ore to obtain huge profits.

Oligopoly, the fourth. Let the three iron ore giants in the resource is king "era is definitely a strong position. So called" oligopoly "refers to a small number of sellers (oligopoly) market dominant market status. Based on analysis, BHP Billiton, Rio Tinto and CVRD the three iron ore giants monopoly industries, and took control of the supply of iron ore products. This shows that have a good grasp of the pricing of iron ore and other steel mills can only be determined by negotiations on the Big Three to follow the price.

The reason why China and abroad in today's iron ore negotiations, always passive, inferior position, as far as can be seen on the analysis. In fact caused by a variety of factors in addition to iron ore negotiations to continue "arguing", but also should be taken "to retreat" strategy, take the initiative to adjust the current iron ore demand in China and strive in the future and foreign iron ore negotiations take the initiative and favorable position.

The author believes this. Can be adjusted from the following three pronged approach in China iron ore demand.
2009 growth rate of fixed investment in steel industry persist in about 20%. According to Li in the industry believed the Minister's speech shows, first, overcapacity led to rapid growth of China's iron ore demand one of the main. For example. Currently, China's steel production capacity of about 660 million tons, of which the real needs of only 4.7 million tons of excess capacity of 1.9 million tons. Thus, excess capacity led to China's rapid growth in iron ore demand, reaching 20% annual increase.

Take the initiative to adjust China's iron ore demand,. First to inhibit the steel industry overcapacity. By accelerating the pace of the restructuring of the steel industry, through mergers and reorganizations, eliminating the backward, to enhance production and operation of standardized management to further enhance the industrial concentration and eliminate backward steel production capacity, so that a smooth adjustment of talent demand growth of China's iron ore, and to regulate iron order to create good conditions for imported ore.

Coupled with the imbalance of regional economic development, the second is due to the role of iron and steel enterprises are very big on local GDP. Local GDP and be willing to pursue the local government launched the steel project, or out of the region's backward steel production capacity, said "insensitive" As a result, leading to the side of China's steel industry, complaining about the "excess capacity" while also continuing to expand production, iron and steel production "surge "The trend is not the situation as income. This has contributed to China's iron ore demand growth, another major culprit.

Should take the initiative to adjust China's iron ore demand,. The invisible hand of the market alone, "can not be solved have to rely on" executive interference "ability to solve this problem. In particular, the need to implement the scientific development concept, cancellation GDP assessment, effectively change the mode of economic growth.
This has contributed to China's current iron ore demand "inflated," one of the main. This is because three of China's iron ore market disorder. China's current iron ore spot market and long co existence of two markets and two kinds of prices, spreads led to rampant speculation and cause excessive imports of iron ore spot market price of a false prosperity and a significant shake.



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