Home > Uncategorized > Xinhua: The ‘Downward Trend’ In The Short-Term Iron Ore Market Is ‘Irreversible’ – Business Insider

Xinhua: The ‘Downward Trend’ In The Short-Term Iron Ore Market Is ‘Irreversible’ – Business Insider

September 5, 2012 Leave a comment Go to comments

Chinese iron ore inventory continued to grow at 25 major ports in the week ending September 3, according to the latest iron ore price report from Chinese state news agency Xinhua.

Inventories of imported iron ore rose by 1.86 million tonnes to 102.53 million tonnes.

Xinhua said the iron ore market will continue to be oversupplied in the near-term and that “the downward trend seems irreversible”.

Chinese steel companies have seen their profits plunge 49.4 percent in the first half of the year, from a year ago, according to the NDRC.

Chinese iron ore prices are at their weakest level since 2009, according to Reuters as demand for steel declines as the Chinese economy continues to slowdown.

China accounts for 60 percent of global iron ore imports and with the slowdown in China, and its shift away from investment-led growth, the Chinese steel market isn’t expected to recover soon. And the Financial Times points out that this slump has been exacerbated by China’s state-dominated steel sector:

“This year Chinese mills have maintained high levels of steel production – even when running at a loss – rather than shutting down their furnaces, because many state-owned mills are incentivised to maximise revenues instead of profit. Revenues from steel mills means more tax revenues for the local government, their ultimate owners.”

For now investors and industry workers hope that policymakers will be prompted to ease if economic data continues to worsen providing some relief to the market.

via Xinhua: The ‘Downward Trend’ In The Short-Term Iron Ore Market Is ‘Irreversible’ – Business Insider.

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