Ore cargoes put off as steel prices slump

[HenryTo]

This is pretty serious stuff - looks like the world economy is continuing to slow down. And China is definitely the marginal country out there. I definitely would not want to be betting on real estate or working in a finance job everything "hits the fan" in the next few months:
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Ore cargoes put off as steel prices slump

June 7, 2005

Mainland steel mills are deferring shipments of iron ore from Australia and Brazil after sharp falls in domestic steel product prices, according to an industry source and a trader in Hong Kong.

They said the price declines in the past few weeks have destroyed confidence in the mainland sector, which saw crude steel output jump by about 25 percent in the first four months despite Beijing's measures to cool the sector's growth.

``Everybody is horrified,'' said a senior trader, adding that in May alone prices for hot-rolled coil fell 1,500 to 2,000 yuan (HK$1,410 to HK$1,880) per tonne to below 4,000 yuan per tonne. ``They are trying to arrange [iron ore] shipments for later months. The situation is really bad,'' said the trader at a top mainland trading company.

Reflecting the slowdown in mainland iron ore imports, freight rates for iron ore from Brazil to China have slumped to about US$20 (HK$156) a tonne from more than US$40 during the first quarter, shipping officials said.

Industry sources and traders have said the sentiment in the mainland steel industry has changed completely from the first quarter as Beijing now appears determined to slow down the rapid expansion of the energy-intensive sector.

The global steel market has also turned soft, closing the door for mainland steel mills to export their way out of the slump at home as they did one year ago, the sources and traders said.

Another iron ore trader based in northwest China said: ``What we really want to know is when it [steel product prices] will stop falling, where is the floor? If we knew when it would stabilize we could at least make plans.''

Adding to the bearish sentiment are high port stocks in China - estimated at 30-40 million tonnes after imports soared by 28 percent to 87.55 million tonnes in the first four months of the year, they said.