Mr Luo Bingsheng deputy director of China Iron & Steel Association on the 2008 international metallurgy and minerals conference gave a speech on 2007 China iron ore import situation and analysis for 2008. Below are the major points of the speech.

1. Forecast of total import volume

In 2008 a number of uncertainties are affecting steel production in China, including enhancing of macro control, slowdown in GDP, fixed asset investment and foreign trade value, as well as climbing raw materials prices, squeezed profitability and weakening global economy. Against such background, steel production may be constrained, while the prices are predicted to stay on a high track, hinging on supply and demand correlation. Meanwhile, fluctuating prices would also impact on output, and help promote elimination of backward capacities.

According to forecast, crude steel production in 2008 can reach 520 million tonnes to 540 million tonnes up by 30 million tonnes to 50 million tonnes or 6.3% to 10.4% from 2007; pig iron may come to 500 million tonnes to 520 million tonnes up by 31 million tonnes to 51 million tonnes or 6.5-10.8%. If bf pig iron output stands at 520mt, there will be an additional demand of 81mt iron ore compared with last year.

It's predicted crude iron ore output would be 910 million tonnes around, 100 million tonnes more than in 2007 equivalent to 47 million tonnes iron concentrate. In this case, a gap of 34 million tonnes will be imported. Considering other factors, like inventory, it's estimated a total of 433 million tonnes iron ore will be procured from overseas market this year up 13% YoY.

2. The world iron ore trade situation, supply and demand

The three miners are expanding mining capacities. Vale exported 265 million tonnes ore in 2007 and plan to export 290 million tonnes in 2008; Rio Tinto produced 170 million tonnes last year and plans to add 15 million tonnes more this year; BHP made some 120 million tonnes, scheduling to raise 10 million tonnes. The above three are expected to increase ore supply of 50 million tonnes in addition, Australian FMG forecast to complete a 50 million tonnes per year ore project and operate it in May to provide 28 million tonnes around yearly; while India's supply on the international market may reduce 8 million tonnes on surging demand at home.

To sum up, additional supply of iron ore in 2008 could be 70 million tonnes, feeding steel production of China and the other regions. The supply and demand should keep balance generally, except periodical and regional tightness given scattered Chinese importers and monopolized market.

3. Marine transport

Since new delivery of ships keeps stable, the dry bulk shipping force may increase 6.8%, carrying volume up 7%; but the global trade volume, affected by US subprime mortgage crisis and slower growth in global economy, may decline and growth rate in bulk cargo shipment is possibly coming down from 2007, suggesting a balance of the market or even turning it slightly relaxed.

4. Ore import situation in January to February 2008

From January to February2008 China imported a total iron ore of 75.0039 million tonnes up by 10.4147 million tonnes or 16.12% YoY.

Average price of imported iron ore was USD 128.47 per tonne up by USD 58.96 per tonne or 84.28% from a year before; in terms of source, Australia accounted 28.5341 million tonnes taking up 38.04%; India accounted 16.857 million tonnes, taking 22.47%; Brazil accounted 16.4148 million tonnes, taking up 21.89%; South Africa 2.6806 million tonnes, 3.57% and other countries and regions 10.5174 million tonnes taking up 14.02%.