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Brazil’s Vale the world’s No.1 iron ore miner, reached a new output record last year, producing 349 million tonnes of the steelmaking ingredient, thanks partly to the opening of its massive S11D mine, its largest-ever operation.
The figure, which beat Vale’s own guidance of 340-350mt, was also a result of a strong performance at its mines in northern Brazil, the company said.
Output for the fourth quarter, in turn, was up 4.5% to 92.4 million tonnes, compared to the same period the previous year, which meant full-year production climbed 1%, Vale said.
The Rio de Janeiro-based company noted it had continued reducing costs and output at its mines in the south-eastern state of Minas Gerais. At the same time, it has boosted production at its operations located in northern Brazil, where costs are lower and quality higher.
Vale, which cut the ribbon on the massive state of Pará-based S11D in December, said the mine should be operating at full tilt next year. By then, the amount of iron ore being dug will be enough to fill 225 Valemax ships — the largest cargo carriers in the world.
Just to put that in perspective and quoting Breno Augusto dos Santos, the geologist who helped discover the mine, the massive asset will enable Vale to remain the iron ore market leader for at least a century.
And that is only considering the “D” block of the deposit. There are three other blocks at S11 that can be exploited later: A, B and C.
The entire S11 deposit has a mineral potential of 10 billion tonnes of iron ore, while blocks C and D have reserves of 4.2bn tonnes, Vale said last month during the mine opening.
S11D, also known as Serra Sul, will add 90m tonnes of annual capacity to Vale’s output by 2020, or about 20% of its expected output for that year.
The timing seems perfect, as the commodity has carried last year’s bullish momentum into the start of 2017, with prices rallying amid speculation that China’s demand for overseas ore will hold up even as the world’s largest miners, such as Vale, bring on new capacity.
On Thursday, import price for 62% iron content fines at the port of Qingdao traded slightly down than in previous days, losing 99 cents to $90.06 per tonne, according to The Metal Bulletin Index.
The steelmaking has more than doubled its value over the past year following near-decade lows of $38 a tonne in December 2015, but analysts insist a correction is just around the corner.
In a note Thursday, BMI Research said prices will remain high over the next three-to-six months, easing by mid-year due to oversupply and record-high Chinese stocks of both steel and iron ore.
Vale, which is also the world’s largest nickel producer, said output of the metal increased by 7% in 2016 from the previous year, a company record attributed to stronger performance at its plants in Canada and New Caledonia.
Iron ore futures in China surged nearly 6 percent to their highest in more than three years on Monday, tracking firmer steel prices as investors bet demand for the building material would remain strong.
Both commodities stretched last week's gains and traders said the uptrend could continue in the short term.
"Mills' booking orders are quite good and they're trying to produce as much as possible," said an iron ore trader in Shanghai.
"People are expecting demand in the spring will be strong."
The most-active rebar on the Shanghai Futures Exchange was up 4.1 percent at 3,428 yuan ($498) a tonne by 0302 GMT. It earlier rose as far as 3,441 yuan, its loftiest since December last year.
Iron ore outpaced the construction steel product, with the most-traded contract on the Dalian Commodity Exchange climbing as much as 5.8 percent to 706.50 yuan a tonne, its highest since December 2013. It was last up 5.5 percent at 704.50 yuan.
Chinese steel mills were also replenishing their stocks of iron ore after the Lunar New Year break earlier this month, traders said.
China said it would continue to push its "One Belt, One Road" initiative - promoting infrastructure projects along historical land and sea trade routes - and deepen cooperation with countries along the belt.
The country will also invest over one trillion yuan ($145.30 billion) in transport in 10 mid-west provinces this year as part of a poverty-reduction plan, the Economic Information Daily newspaper reported, citing the local government.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB jumped 3.3 percent to $86.62 a tonne on Friday, its strongest since August 2014, according to Metal Bulletin.
Iron ore climbed on Tuesday after steep losses in the previous session, with markets waiting for fresh Chinese economic data for clues on the state of demand in the world's top steel consumer.
Economic data in the coming weeks is expected to show the world's second-largest economy got off to a good start in 2017, with steady growth giving the central bank room to slowly tighten monetary policy and contain the risks from high levels of debt. Trade data is due on Friday.
The ferrous sector has come under pressure since the country launched a surprise short-term rate hike last week, boosting financing costs for holders of commodities, which are priced in dollars. Steel prices slid more than 5 percent.
"We continue to feel that iron ore looks overbought and is due for a correction, especially as it looks more likely that China is interested in reining in things in given the short-term interest rate hike," said INTL FCStone in a report.
China is expected to report on Tuesday that foreign exchange reserves fell for the seventh straight month in January but at a much slower pace as authorities tightened controls on capital outflows and the surging U.S. dollar lost some steam.
The most-active rebar on the Shanghai Futures Exchange climbed 2.2 percent to 3,165 yuan ($461) a tonne. In the previous session, it closed down 6.8 percent, its weakest since Jan. 10 at 3,062 yuan a tonne.
The dollar also edged up after Philadelphia Federal Reserve Bank President Patrick Harker on Monday said he would be open to raise interest rates again at the U.S. central bank's March meeting if growth in jobs and wages continues.
Iron ore on the Dalian Commodity Exchange rallied 3.1 percent to 625 yuan ($91).
"Iron ore spot prices threatened to push below $80 a tonne after data showed another strong rise in inventories of iron ore held at Chinese ports," ANZ said in a note. China's iron ore stocks at ports hit a record high last week.
"Stocks rose by 3.3 percent, or 3.9 million tonnes, to 123.45 million tonnes last week. This should come as no surprise, with subdued demand around the holidays coming amidst strong growth in supply."
Shipping interruptions caused by stormy weather cut iron ore shipments to China from Australia's Port Hedland terminal in January by 7.8 percent from a month ago, port authorities said on Monday.
The port, used by BHP Billiton and Fortescue Metals Group, saw exports to China slip to 34.5 million tonnes from 37.4 million tonnes in December, after a tropical low swept across the Pilbara iron ore district on Jan. 27, triggering an emergency clearing of vessels for just under 18 hours.
Overall shipments from the world's biggest iron ore export terminal fell to 40.3 million tonnes in January from 43.9 million tonnes in December, according to the Pilbara Ports Authority.
Shipping was also suspended for 38 hours at the nearby Dampier port, used by Rio Tinto to ship iron ore, the port said.
The port interruptions would have a minor impact on overall second-half output from Australia, said two equity analysts who spoke on background. But the impact could be overcome if the miners recover the lost time over the next several months, they said.
Iron ore was one of the best-performing commodities in 2016, defying analyst forecasts for a correction on the back of plentiful supply and an expected slip in demand from China, the world's biggest buyer.
This has prompted producers to mine and ship at or near record levels.
Chinese steel and iron ore futures tumbled on Friday after the country's central bank unexpectedly raised short-term interest rates, spooking financial markets on the first day back after a week-long Lunar New Year holiday.
While the rate increases were modest, they reinforced views that Chinese authorities are intent on both containing capital outflows and reining in risks to the financial system created by years of debt-fuelled stimulus.
Along with other commodities including copper and rubber, Chinese investors also sold off equities.
The most-active rebar on the Shanghai Futures Exchange closed down 6.8 percent at 3,113 yuan ($453) a tonne.
Iron ore on the Dalian Commodity Exchange fell 5.4 percent to end at 611.50 yuan per tonne.
Trading in the physical market was slow with many participants still on "holiday mode", said a Shanghai-based iron ore trader.
"But I don't expect to a see a rush of restocking after the holiday. Many mills have built their stocks long before," he said.
The weaker futures could drag down spot iron ore prices, which did not move while China was on holiday.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB was unchanged at $83.34 a tonne from Jan. 26 through Feb. 2, according to Metal Bulletin.
"Slowing Chinese construction activity in 2017 is expected to weaken steel demand, and with it, demand for iron ore and metallurgical coal," National Australia Bank said in a note.
BHP Billiton has been able to cash in on surging iron ore prices, boosting output to record levels in the December quarter as it continued to restrain oil and gas production in the US.
Iron ore output hit a record 60 million tonnes in the quarter, up 9 per cent from the same period a year earlier as it benefited from the ramp-up in output at the Jimblebar mine in the Pilbara that also allowed it to access the rebound in prices recorded in the quarter.
In the half, iron ore output was ahead 4 per cent at 118 million tonnes.
"We have performed well during a period of higher prices, with record iron ore volumes achieved," chief executive Andrew Mackenzie said.
The price of iron ore received by the miner hit $US55 a tonne in the quarter, rising 28 per cent year on year, which will help boost earnings in the December half. The rise here was outpaced by surges in the price of coking coal, which more than doubled to $US179 a tonne, and the price of steaming coal, which rose 51 per cent to $US74 a tonne.
In the petroleum division output declined 15 per cent from a year earlier as the company decided to defer onshore US developmental activity as it waits for prices to improve. The drop here was directly in line with the 15 per cent fall recorded in the September quarter.
At the same time, it has lifted by $US120 million to $820 million exploration spending, following the successful bid for the Trion acreage in Mexico and successful wells drilled in both Trinidad and Tobago as well as the Gulf of Mexico.
"We will accelerate our counter-cyclical oil exploration efforts this year," Mr Mackenzie said. The success with the Trion bid has placed BHP in "a leading position" to develop newly opened Mexican acreage in the Gulf of Mexico, he said.
With copper, BHP said it had cut its production forecast 2 per cent to 1.62 million tonnes due to an extensive power outage at the Olympic Dam project in South Australia. In the half, copper output declined by 7 per cent to 712,000 tonnes.
This revision, coupled with lower grades at the Escondida mine in Chile, resulted in copper production declining.
Asset gains of between $US150 million and $US200 million will be booked in the December half, it said, which would largely be offset by $US164 million due to the cancellation of the Caroona exploration licence in NSW.
The results came amid mounting predictions from experts that the current commodities rally cannot last.
"The latest price gains are not sustainable," said Caroline Bain, chief commodities economist at Capital Economics Ltd.
"It seems likely that it is premised on optimism about demand after the new year holiday," she said, referring to the Lunar New Year which falls at the end of this week.
The raw material surged last year as stimulus in China supported steel production, buttressing record demand for imports as local mine output fell.
The World Bank added it voice too in its quarterly Commodity Markets Outlook released this week.
"New low-cost capacity is expected online this year, notably Vale's new S11D project in Brazil. These considerations, along with rising scrap supply and an expected slowdown in China's steel production, are expected to pressure prices downward," it said.
Ore with 62 per cent content in Qingdao rose 1.9 perc ent to $US82.69 ($109.68) a dry ton on Tuesday, according to Metal Bulletin Ltd. That was near the peak of $83.65 hit on January 16, which was the highest price since October 2014.
Goldman Sachs head of commodities research Jeffrey Currie said the outlook for iron ore was negative even if prospects for most raw materials was bullish.
"If we think about Brazil, Australia adding supply to the market, it'll likely put downward pressure on prices," he said.
Chinese iron ore futures dropped for a third day on Friday, retreating further from a three-year high, with trading activity thinning ahead of the Lunar New Year break late next week.
Many Chinese steel mills replenished stocks of raw material iron ore in previous weeks, traders said, but most of them including traders are now out of the market for an early start to the Spring Festival holiday that begins on Jan. 27.
There was little impact on the futures market this morning from data showing that China's economy grew 6.8 percent in the fourth quarter, slightly ahead of economists' expectation of 6.7 percent.
The most-active iron ore on the Dalian Commodity Exchange was down 0.2 percent at 631.50 yuan ($92)a tonne by midday. The contract was still up nearly 4 percent for the week after touching a three-year peak on Wednesday.
"The market is feeling very optimistic going into the new year because there is good support from the property and infrastructure side," said an iron ore trader in Singapore.
"The stimulus injected last year will last till mid-2017, so there's quite ample amount of credit available."
China's increased government spending helped boost its economic activity last year and spurred demand for steel in the world's top consumer and producer.
China's crude steel output rose 1.2 percent to 808.4 million tonnes last year, recovering after dropping in 2015 for the first time in more than three decades.
The most-active rebar on the Shanghai Futures Exchange rose 0.4 percent to 3,275 yuan a tonne, but was still off Monday's one-month peak of 3,418 yuan.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB slipped 1.3 percent to $80.99 a tonne on Thursday, according to Metal Bulletin, having hit a two-year high of $83.65 on Monday.
"With its strong correlation with Chinese steel prices, iron ore will continue to be dictated by policy measures in China," ANZ commodity strategist Daniel Hynes said in a report.
"While the restructuring of the country's steel industry remains on track, we still see some risk of weaker steel prices weighing on iron ore."
The Hong Kong stock exchange plans to launch a U.S. dollar-denominated, cash-settled iron ore futures contract in Hong Kong this year, it said on Thursday, as the bourse aims to compete with U.S. and Asian rivals.
The iron ore contract would be linked to an index, and the launch is subject to regulatory approval, the Hong Kong Exchanges and Clearing Ltd (HKEX) said in a statement.
It also said it is considering listing a hot-rolled coil steel product on the London Metal Exchange.
The exchange said it was keen to build on the success of the LME's steel scrap and rebar contracts since they have grown in volume.
The exchange said it is continuing to seek all the necessary approvals to operate its spot commodities trading platform in Qianhai, the free trade zone in the city of Shenzhen, just north of Hong Kong.
"Once the Qianhai platform is up and running, we will look at ways to connect it with the LME, to provide new opportunities to players active in both the mainland's domestic markets and international markets," it said.
It said it had largely completed development of IT systems, had started internal testing and was in talks with "leading warehouse companies on the mainland about potential partnerships".
It expects to launch the platform this year, it added.
Iron ore and steel futures in China dropped more than 1 percent on Wednesday, falling back after rapid gains that pushed the steelmaking raw material to its highest in three years.
Iron ore has been tracking steel prices that have benefited from China's efforts to cut excess production capacity, but some traders say the spike in iron ore futures - which lifted the spot benchmark to a two-year peak - was too fast too soon.
"It was driven by money," said an iron ore trader in Beijing, citing speculative activity in the futures market.
"There was some demand to stockpile iron ore ahead of the holiday but I don't think the demand was quite that strong," she said. Chinese markets will be shut for a week for the nation's Lunar New Year break in late January.
The most-traded iron ore contract on the Dalian Commodity Exchange was down 1.6 percent at 636 yuan ($93)a tonne by 0245 GMT, after earlier hitting its loftiest since December 2013 at 666 yuan.
On the Shanghai Futures Exchange, rebar slipped 1.3 percent to 3,284 yuan per tonne. The construction steel product touched a one-month high on Monday.
Iron ore has increased 15 percent so far this month and rebar has risen 13 percent, as both commodities extended last year's massive gains that came after years of declines.
Restocking demand for iron ore ahead of China's Lunar New Year holiday that starts at the end of next week has waned, and could weigh on prices, traders said.
"We asked several mills and they said they have already bought enough cargo for the coming holidays," said a trader in Shanghai.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB fell 2.5 percent to $81.55 a tonne on Tuesday, a day after touching a 27-month high, according to Metal Bulletin.
Global miner Rio Tinto hit its mid-point target for iron ore shipments from Australia in 2016 and kept its guidance of 330 million-340 million tonnes for this year intact.
The world's second-biggest supplier of the steel-making raw material shipped 327.6 million tonnes in 2016 against guidance of 325 million-330 million tonnes, it said.
Guidance for shipments of 330 million-340 million tonnes in 2017 was unchanged.
"Sales in the (fourth) quarter exceeded production by 2.2 million tonnes, primarily drawing down on inventories built at the ports in the third quarter due to maintenance," Rio said in a statement.
Fourth quarter iron ore shipments climbed by 1 percent to 87.7 million tonnes versus the year ago period, the company said.
Shipment levels are closely watched amid volatile global iron ore prices, with the 1.4 billion-tonne-per-year sea-traded market now in balance but threatened by a looming supply glut.
Analysts expect Australia's other major producers, BHP Billiton and Fortescue Metals Group, to report near-record quarterly production figures later this month.
The price of iron ore unexpectedly surged in 2016 by about 80 percent, fueled by strong demand in China, but forecasters expect a steep decline in the price this year to less than $60 a tonne.
The company also said its mined copper production, a key growth business, was 4 percent higher than 2015 at 523,000 tonnes, though still below full year guidance. It cited the absence of copper delivered from its Grasberg mine in Indonesia and lower than expected production at its Kennecott mine in the United States for the shortfall.
Through a joint venture agreement with Freeport-McMoRan, Rio is entitled to 40 percent of material mined only above an agreed threshold.
The company set 2017 aluminium production guidance at between 3.5 million to 3.7 million tonnes, little changed on the 3.6 million tonnes produced in 2016.
Rio Chief Executive Jean-Sebastien Jacques said 2016's overall production performance was "strong" and based on cost efficiencies and maximized cash flow.
The China Iron and Steel Association(CISA) said that the average daily crude steel output of large and medium-sized steel mills of China (all CISA members) totaled 1.5681 million tonnes in Jan 01-Jan 10 period, up 3.47 percent from last ten days( Dec 21-31, 2015).
China's large and medium-sized steelmakers made a combined loss of 3.15 billion yuan ($507.1 million) in the first two months of this year, an industry official said on Thursday, as a supply glut and slower demand growth dampened prices.
Apparent consumption of crude steel in China, the world's top producer and consumer of the construction material, fell 7.5 percent in January and February, Wang Liqun, vice chairman of the China Iron & Steel Association (CISA) told an industry conference.
Laden with debt and struggling to make money as the world's No.2 economy loses momentum, China's steel mills do not appear obvious candidates for overseas expansion.
But the country's crisis-hit steel sector is calling for strong government backing for plans to ramp up foreign acquisitions, as it looks to escape weak demand-growth and soaring environmental costs at home.
In a draft of a revised restructuring plan for the industry issued late last week, Beijing included a line saying it would support mills' efforts to buy assets abroad, with attention now turning to more detailed measures that could be announced later in the year.
"There is capacity that we can shift abroad, to regions that need it like Southeast Asia and Eastern Europe, as well as places like Indonesia and Africa where demand for steel is huge but production capacity is very low," said Deng Qilin, Chairman of Wuhan Iron and Steel Group, China's No.4 producer.
Foreign expansion by the world's biggest steel sector would offer some support to prices of steelmaking ingredient iron ore .IO62-CNI=SI, which plunged to record lows this month as Beijing ramps up environmental checks that could shut more mills in an industry where production capacity is 300 million tonnes above demand.
The export market offered one of the few bright spots for Chinese producers last year, but trade barriers erected amid accusations that China has been dumping products overseas mean exporting is becoming more difficult, with firms increasingly looking to shift actual output abroad.
Beijing has already rolled out measures to broadly encourage the foreign expansion of Chinese industry including simplifying currency rules and making it easier to raise money through bond markets, with sectors such as nuclear at the forefront of the drive overseas.
At this year's full session of parliament, Wuhan Iron and Steel along with another major producer, Anshan Iron and Steel Group, urged the government to provide financial and policy support for the steel sector's expansion abroad.
China's top steelmaking province of Hebei has also called for greater backing for its plan to move 20 million tonnes of capacity overseas by 2023.
Some are already making the leap, with Hebei Steel Group, China's largest steelmaker, looking to build a 5-million-tonne-per-year steel project under a joint venture in Africa.
Shougang, one of the largest mills, in February started production at a Malaysian project with an annual capacity of 3 million tonnes.
A smaller company, Bazhou New Asia Metal Products Co. Ltd, bought a stake in an Indonesian firm in 2013 to build a steel strip project, with vice-president Xing Xiuying saying it made the move as there was little room to expand in China.
"Investing abroad will help China to cut the excess capacity at home in the long run, as some companies will shift their focus to overseas markets and thus reduce output and competition domestically."
Others have found moving more tricky, with the Baosteel Group and Wuhan Iron and Steel both dropping plans to build plants in Brazil, blaming high costs.
"It will depend on how much capital is eventually engaged in helping Chinese firms go abroad, but generally speaking, the overseas expansion strategy will have a positive impact on Chinese steelmakers in seeking new growth," said Lawrence Lu, analyst at Standard & Poor's Ratings Services in Hong Kong.
Some were more sceptical, questioning whether there would be cost advantages to shifting output.
"The government should not use this as a main solution to ease domestic overcapacity as any blind push would bring consequences," said Jiang Feitao, policy researcher at the China Academy of Social Sciences.
Average daily output from China's large steel producers declined 5 percent to 1.682 million tonnes in the first ten days of March from the preceding 8-day period, data from the China Iron & Steel Association (CISA) showed on Wednesday.
Harsher environmental inspections and deepening losses have forced Chinese steel mills to cut output amid lukewarm steel demand in the world's top consumer. Rebar on the Shanghai.
China's crude steel output fell 1.5 percent to 130.5 million tonnes for the first two months of 2015, government data showed on Wednesday, as a supply glut and slower demand growth led mills to bring forward scheduled maintenance to curb output.
Average daily steel output slipped to 2.212 million tonnes, according to Reuters' calculations based on data from the National Bureau of Statistics, although the figure was up 0.7 percent from December.
China's statistics bureau releases combined output data for the first two months of the year in order to avoid monthly data being skewed by the Chinese new year holiday.
"A slower economy has hit production in power-intensive sectors such as steel. And a weak property market has also piled pressure on steel demand," said Cao Yang, an analyst with Shanghai Pudong Development Bank in Shanghai.
Steel prices lost 28 percent during 2014, due to overcapacity and the economic slowdown, and industry sources expect more inefficient steel mills to shut down this year, given tougher environmental laws.
Production by large Chinese steel mills dipped for much of January and early February but jumped 8 percent in the final 10 days of February to 1.77 million tonnes a day.
China, the world's largest steel producer and consumer, set its annual economic growth at about 7 percent this year, the lowest rate in a quarter of a century. The "new normal" is expected to weigh down demand for commodities.
Steel production grew 0.9 percent to 822.7 million tonnes in 2014, it slowest rate in more than three decades, as its cooling economy curbed demand and the government moved to tackle overcapacity and pollution.
Li Xinchuang, the vice secretary general of the China Iron & Steel Association, forecast in December that Chinese steel production would rise to 834 million tonnes in 2015.
Steel exports from top producer China fell sharply in February, indicating that Beijing's attempt to curb surging overseas sales by cancelling tax rebates on boron-added steel may have started to bear fruit.
Preliminary Chinese customs data showed that steel product exports in February were down 24.2 percent from January at 7.8 million tonnes, though they were still up 62.5 percent from a year ago.
"Given the China New Year distortions (in February) let's wait until the March data before getting too excited, but that's a big drop nonetheless," Nomura analysts said in a note.
Last year China's steel exports rose 50.5 percent to a record 94 million tonnes, with about 40 percent of the overseas shipments containing the chemical element boron to qualify for the tax rebate.
As such, the fall in exports last month provides some hope for an oversupplied industry struggling to absorb the flood of Chinese exports and battling with steel prices ST-CRU-IDX at their lowest since 2009.
However, the China Iron and Steel Association has forecast that steel exports will remain between 80 million and 90 million tonnes this year and there are some concerns that Chinese steelmakers could exploit other tax loopholes.
The European Union will impose anti-dumping duties later this month on imports of stainless steel cold-rolled sheet from China and Taiwan, according to two sources familiar with a European Commission proposal.
The Commission plans to set tariffs of about 25 percent for imports from China and of about 12 percent for Taiwanese product, following a complaint lodged in May 2014 by the European steel producers association, Eurofer.
The Commission will present its proposal to EU member states next week and by March 26 will put in place the duties, which are provisional pending the outcome of an investigation due to end in September.
Eurofer says that China and Taiwan shipped 620 million euros ($680 million) worth of cold-rolled stainless steel into the European Union in 2013, some 17 percent of the overall market, and were guilty of dumping, or selling at unfairly low prices.
A parallel investigation into alleged illegal subsidies for Chinese producers is also due to end in September.
Europe's largest stainless steel producers are Acerinox, Outokumpu and Aperam. Chinese and Taiwanese producers include Shanxi Taigang Stainless Steel Co, Baosteel <600019.SS > and Yusco.
The Commission, prompted by Eurofer, is also investigating alleged dumping of grain-oriented flat-rolled electrical steel, typically used in transformers, by producers in China, South Korea, Japan, Russia and the United States.
Eurofer is also seeking to prolong existing duties on Chinese imports of wire rod.
Eurofer told a news conference on Thursday that, despite a lower euro and a slow pick-up of European demand, European producers were still confronted with a massive increase of imports from Asia, and from China in particular.
Total Chinese steel exports rose to a historic peak of 93 million tonnes in 2014, Eurofer said, equivalent to 60 percent of total EU steel consumption.
Chinese steel exports to the EU increased to 4.5 million tonnes last year from 1.2 million tonnes in 2009.
Eurofer believes the large expansion of China's steel industry does not reflect cost advantages but is based on state-owned enterprises raising capital on preferential terms, as well as other forms of subsidy.
It also says China's exports include not just basic products, such as hot-rolled steel, but also high-end coated sheets.
Eurofer said it was also concerned by a potential export surge from Russian producers due to the lower rouble and depressed local economy. It has urged the Commission to monitor imports closely.
Crude steel capacity in China, the world's top producing country, is likely to grow this year despite difficult market conditions as new projects are coming onstream, the Ministry of Industry and Information Technology (MIIT) said on Thursday.
Long-standing overcapacity, slower growth in demand and tighter credit have forced many Chinese steel mills to produce at a loss or at low profitability.
"Generally, oversupply in the steel sector is unlikely to improve this year, exports will drop slightly, steel prices will stay at low levels and steel mills' profitability may not be positive," MIIT said in a report on its website (www.miit.gov.cn).
Investment in the ferrous metals smelting and processing industry fell 5.9 percent last year but remained at a relatively high level and there are still 2,037 new steel projects under construction.
China's crude steel capacity reached 1.16 billion tonnes at the end of 2014, with its production accounting for 49.4 percent of global output, MIIT said.
Some analysts expect capacity to increase by only about 10 million tonnes this year.
Despite the removal of an export rebate for boron-added steel products from this year, steel exports are expected to stay at elevated levels due to a continued supply glut at home and competitive prices, the ministry said.
The China Iron & Steel Association has forecast domestic crude steel output would fall 1.1 percent to 814 million tonnes this year, after rapid expansion over the past decade, as a slowing economy has hit demand for commodities.
China's apparent steel consumption fell 4 percent to 740 million tonnes last year, and steel demand is unlikely to improve much as Beijing is shifting its economic growth model and slowing fixed asset investment.
In order to minimise their risks on loans, banks have largely cut credit to Chinese steel mills since last year, leading to shutdowns and bankrupticies at some companies.
The debt-to-asset ratio for large steel mills dropped 0.8 percentage points to 68.3 percent last year but was still 11 percentage points higher than in 2007 when the industry experienced a boom.
Production from China's large steel mills fell 5.1 percent over Jan. 11-20 to 1.694 million tonnes, data from the China Iron and Steel Association (CISA) showed, with producers responding to weak demand by cutting output.
Steel demand is traditionally weak in January, but output rose to its highest rate since October in the first 10 days of the month, adding to a supply glut that has sapped prices.
China has eliminated 31.1 million tonnes of steel production capacity last year, higher than expected, a senior official of the industrial ministry said on Tuesday, as Beijing seeks to ease overcapacity and improve air quality.
China has also removed 81 million tonnes of cement production capacity, Mao Weiming, vice minister of the Ministry of Industrial and Information Technology, told at a presser in Beijing.
China, the world's largest steel producer, earlier set the target of 27 million tonnes for the steel sector.
Separately, Hebei province, the country's biggest steel-making region, has closed as much as 15 million tonnes of steel production capacity last year, meeting its target, but aims to shut only 5 million tonnes this year.
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Global resources giant BHP Billiton reported that copper output for the three months ended September 30 reached 273,900t, up 24% from the same period in the previous year, due to higher ore grades this quarter at its Escondida operation in Chile and the effects of a strike that impacted production in the year-ago quarter.
Output from Latin American operations grew by 32% to 235,700t, the company said in a statement.
The company's 57.5% share of output from Escondida amounted to 101,200t of copper in concentrate and 41,600t of cathode, representing increases of 103% and 26.4%, respectively. On a 100% basis, Escondida mined 103Mt of ore during the quarter, a 48.5% increase, with a 39.2% higher average head grade of 1.35% copper.
Escondida should see a 20% increase in copper output during fiscal 2013 after scheduled maintenance and tie-in activities were completed this quarter, according to the company.
Antamina in Peru contributed a record 40,200t of copper in concentrate in the 2012 quarter versus 30,300t in the year-ago quarter as milling rates continue exceeding nominal capacity, the company said. On a 100% basis, the mine registered throughput of 54.5Mt during the quarter, up from 44.2Mt, and an average copper head grade of 1.15% versus 1.11% year-on-year.
Antamina also contributed 14,514t zinc, up 62%, 919,000oz silver (-5.45%), 260t lead (155%) and 454t molybdenum (-23.7%). BHP Billiton holds a 33.8% stake in the mine.
The Spence and Cerro Colorado mines in Chile together produced 17,800t of copper cathode in fiscal Q1, a year-on-year decrease from 22,500t. The company also produces copper at the Olympic Dam mine in Australia and Pinto Valley in the US.
After four straight months of declines, consumer price inflation has finally edged up in China.
Chinese consumers paid 2% more in August than they did a year ago, the government's National Bureau of Statistics reported Sunday. That's up from a 1.8% increase in July -- a two-and-a-half year low.
China's annual inflation rate rose 2.0% in August, the government's National Bureau of Statistics reported Sunday, up from 1.8% in July -- a two-and-a-half year low.
Food prices, which account for more than a third of the inflation calculation, rose 3.4% during the month.
Household finances in China are especially susceptible to fluctuations in food prices, as many poor families spend large percentages of their income on food.
Still, inflation remains at very low levels. As recently as one year ago, China's consumer price index stood above 6% -- well north of the government's stated inflation rate target of 4%.
The very low rate should allow the government more flexibility in pursuing economic stimulus.
In July, officials said that annual economic growth dropped to 7.6% in the second quarter -- down from 8.1% the previous quarter.
The People's Bank of China twice lowered interest rates, and the central bank has also tried to spur growth by cutting the amount of money banks are required to hold in reserves.
But those measure seem to have fallen flat. Some analysts have recently lowered their growth forecasts for the rest of the year, while some noted that weakness is likely to extend into 2013.
On Friday, the government confirmed more action, this time in the form of a $157.7 billion investment in 55 new infrastructure products. Analysts said the move should help boost growth in the fourth quarter.
Zhiwei Zhang, and economist at Nomura, said in a research note that the projects -- which include 25 new subway lines -- are a sign that the government's policy stance "has become significantly more proactive."
China's official factory purchasing managers' index fell to a lower-than-expected 49.2 in August from 50.1 in July, official data showed on Saturday, in a result that is likely to strengthen the case for further policy steps to bolster growth.
The official PMI dipped below 50, which demarcates expansion from contraction, for the first time since November 2011, in the latest sign that the world's second-biggest economy is struggling against global headwinds.
Economists polled by Reuters this week had expected the August official PMI to slip to 50.
China cut interest rates in June and July and has been injecting cash into money markets to ease credit conditions to support the economy that notched a sixth straight quarter of slower growth in the April-June period.
But analysts are divided over whether that will be enough to stop the slowdown extending to a seventh quarter.
The PMI's output sub-index eased to 50.9 in August from July's 51.8, the National Bureau of Statistics said.
A flash PMI published last week by HSBC plunged to a nine-month low of 47.8 in August, as new export orders slumped and inventories rose, a signal that a persistent slowdown in economic growth has extended deeper into the third quarter.
According to the latest Reuters poll, China's annual economic growth could pick up to 7.9 percent in the third quarter from a three-year low of 7.6 percent in the second quarter in response to government policy fine-tuning.
A raft of weaker-than-expected July data had cooled market expectations for any quick economic recovery, especially as the central bank sticks to its "prudent" policy stance for fear of reigniting property and inflation risks.
Still, analysts believe the central bank will continue to loosen policy further by cutting interest rates and banks' reserve requirement ratio in coming months to support growth.
The HSBC PMI has been below 50 for 10 straight months, reinforcing calls from analysts and investors for further measures from Beijing to support economic growth.
The official PMI generally paints a rosier picture of the factory sector than the HSBC PMI as the official survey focuses on big, state-owned firms, while the HSBC PMI targets smaller, private firms that have limited access to bank loans.
There are also differing approaches to seasonal adjustment in the surveys.
The final HSBC reading will be published on September 3, as will the National Bureau of Statistics' services PMI.
Marc Faber, the Swiss investor and ultra bear, says there have been four mega bubbles in the past 40 years. In the 1970s it was gold; in the 1980s it was the Nikkei, and in the 1990s it was the Nasdaq. Bigger than all of them, though, has been the iron ore bubble, a tenfold increase in prices in less than a decade.
Iron ore is the raw material for steel, production of which has rocketed as a result of China's economic boom. Consider the following facts. In the past 15 years, China has built 90 million new homes – enough to house the populations of the UK, France and Germany combined. A quarter of global steel demand is for Chinese property and Chinese infrastructure.
Commodity-rich countries, like Australia, have never had it so good. China takes 25% of Australia's exports and iron ore accounts for 60% of all the goods Australia sells to China. One reason Australia avoided recession during the global downturn of 2008-09 was that it had a well-run banking system. A much bigger reason was that the country had become a giant pit from which China could extract the minerals it needed for its industrial expansion. Money flooded into the country from sovereign wealth funds and hedge funds looking for AAA investments. The Australian dollar has soared, as have property prices.
China's economy is now slowing, and although the economic data is not particularly reliable, it seems to be slowing fast. The country has two million unsold homes, with another 30 million under construction. There is a glut of iron ore and the price is falling. Where does that leave Australia?
Horribly exposed, quite obviously. It has an over-valued currency, an over-valued property market, and its major customer is now desperately pulling every available policy lever in the hope of avoiding a hard landing. Whatever happens, the Australian dollar is a sell. Just how big a sell will depend on how successful Beijing is in reflating the Chinese economy.
China's consumer inflation eased to its lowest rate in two and a half years in July, giving the government more leeway to loosen credit to spur the slowing economy.
The Consumer Price Index (CPI), a key gauge of inflation, grew to 1.8 percent year on year in July, the slowest rate since February 2010, the National Bureau of Statistics (NBS) announced Thursday.
The rate was 0.4 percentage points lower than the figure for June.
The Producer Price Index (PPI), a main gauge of inflation at the wholesale level, fell 2.9 percent in July from a year earlier.
The easing inflation is believed to be a result of the base effect. The CPI growth rate hit a 37-month high of 6.5 percent in July last year before gradually retreating as China's economy slowed for eight quarters in a row.
China's official factory purchasing managers' index (PMI) fell to an eight-month low of 50.1 in July, suggesting the sector is barely growing, while a rival HSBC survey indicated the more market-sensitive private sector is starting to recover.
The HSBC PMI rose to a seasonally adjusted 49.3, its highest level since February and little changed from a flash, or preliminary, estimate of 49.5.
With both PMI readings around 50 -- a threshold dividing expansion from contraction -- the surveys signal that the private and state-backed parts of China's vast factory sector are stabilising - albeit at a relatively low level of growth.
"It is clear that the manufacturing sector is doing very poorly, and requires policy support," Dariusz Kowalczyk, senior economist at Credit Agricole-CIB in Hong Kong said.
"However, we want to highlight the fact that such levels of sentiment are still consistent with positive growth of industrial output," he wrote in a note to clients.
Indeed, both the official PMI and the HSBC version showed factory output at 50 or above. Government data showed industrial output in June rose 9.5 per cent from a year earlier.
Copper prices retreated on Monday amid growing concerns of a spreading debt contagion in the euro zone as Spain risks becoming the fourth country in the bloc to seek a sovereign bailout, denting the outlook for metals demand worldwide.
Worries about the health of the global economy pushed Shanghai copper futures down more than 2.5 percent, bringing prices to their lowest since June 29. The most active November copper contract dropped as low as 54,540 yuan ($8,600) per tonne, its biggest percentage fall since June 4, before recovering some ground by the midday trading break.
Three-month copper on the London Metal Exchange had fallen 0.6 percent to $7,503.50 per tonne by 0418 GMT, extending losses after a decline of 2.4 percent in the previous session, the most since June 21.
"Shanghai copper is mostly playing catch up with London copper, which fell steeply on Friday due to concerns about the Spanish economy," said a Shanghai-based trader. "Chinese investors are also more sensitive to bad news lately, given that China's economy is evidently slowing down while physical copper demand has been sluggish as well."
Looking forward, market players said they expected major governments to introduce more stimulus to stabilise the world economy, which has been dented by slowing growth in China, a shaky recovery in United States and mounting debt problems in the euro zone. Such policies are expected to boost metal prices, at least temporarily.
Investors grew jittery about Spain's finances after the tiny region of Murcia said it would seek financial assistance from the central government, and media reported that half a dozen local governments were ready to follow in the footsteps of Valencia, which has already requested help from the central government to stay afloat.
Elsewhere in the euro zone, Greek Prime Minister Antonis Samaras said the country was in a "Great Depression" similar to the American one in the 1930s, two days before international lenders arrive in Athens to push for additional cuts needed for the debt-laden country to qualify for further rescue payments to keep it afloat.
Traders are awaiting manufacturing data from China and Europe, due on Tuesday, for further clues on the health of the global economy and its implications for metals demand.
"The next trading cues we are looking forward to are news of new stimulus measures in China and the United States, and concrete measures to deal with Spain's problems," said an analyst with a international trading firm. "The next stimulus measure to watch is an expected Bank reserve ratio cut by China.
But we don't think this will be rolled out in July since it would be too soon after the last interest rate cut."
The grim economic backdrop offset an International Copper Study Group report on Friday that said the global refined copper market was in a 384,000-tonne deficit from January to April 2012, up sharply from a 26,000-tonne deficit during the same period of 2011.
The report implied some support from fundamentals for copper prices at current levels, but bearish market sentiment and global economic uncertainties are weighing on the demand outlook and discouraging investors from buying.
China's Baotou Steel Rare-Earth Hi-Tech will join six other firms to invest a total of 70 million yuan ($10.98 million) to start a rare earths trading platform in early August, the firm said in a statement late on Friday.
Each shareholder will invest 10 million yuan and hold around 14.29 percent stake in the company, said Baotou Rare Earth, China's top rare earths producer.
Baotou said the exchange will help to establish a unified physical trading platform, allowing more transparency in prices.
China is the world's top rare earth producer and accounts for more than 95 percent of the global output. The exchange will help the country exert more control over the pricing of 17 strategically important rare earth metals on the global market.
Currently, prices in China are published by several independent consultancies and most of the metals have fallen over the past few months due to weaker demand.
The exchange will be located in Baotou city in China's Inner Mongolia region, home to nearly half of the world's light rare-earths production, Baotou said.
China’s growth fell to 7.6 per cent in the second quarter, its slowest since early 2009, as a property market downturn and weak exports weighed on the world’s second-biggest economy.
Over the past two months, as evidence of the slowdown has mounted, the government has shifted its policy to a pro-growth stance, which analysts say is likely to bring about a recovery in the second half of the year.
“The expectation for weakness in the second quarter was pretty strong. But the investment number is the surprise. There appears to have been a significant pick-up. That is policy beginning to work”, said Ken Peng, an economist with BNP Paribas in Beijing. “We are looking for a small rebound in the third quarter and a bigger rebound in the fourth quarter.”
The year-to-date investment figure jumped to 20.4 per cent last month from 20.1 per cent in May, an indication that the increase in investment in June alone must have been considerably stronger, following on the heels of the government’s moves to stimulate the economy.
The Chinese central bank cut interest rates last week, the second time in less than a month. Premier Wen Jiabao has also said that the government will look to increase public investment in order to stabilise the economy.
A steep drop in inflation, to just over 2 per cent from last year’s high near 7 per cent, has cleared the way for more aggressive policy easing.
The latest bank lending figures, published on Thursday, confirmed that the government is clearly trying to support growth. New loans reached Rmb920bn in June, up from Rmb793bn in May and more than expected.
Yet officials have also repeatedly vowed that they will not unleash a massive stimulus programme as they did in late 2008 when the global financial crisis erupted. That boom in spending and bank lending fuelled debt worries that China is still trying to contain as well as a property bubble that it has been trying to deflate.
Mr Wen has also been adamant that the government will not relax the measures that it has used to dampen property speculation, fearful that a big rebound in already lofty housing prices could ensue.
If the second quarter does indeed prove to be the trough of this economic cycle for China, commentators who have described the current downturn as a soft landing would have some vindication.
The peak-to-trough drop in growth would be 4.5 percentage points from 2010 to now. That contrasts with a plunge of 8 percentage points in the previous downturn, from 2007 to the start of 2009.
Consumer price inflation in China accelerated at the slowest rate since January 2010 in June, as food costs eased, official data showed on Monday.
In a report, China’s National Bureau of Statistics said consumer price inflation rose by a seasonally adjusted 2.2% in June, slowing from 3.0% in May.
Analysts had expected Chinese CPI to rise by 2.3% in June.
Month-on-month, the consumer price index fell 0.6% in June, compared to a 0.3% drop in May.
Politically sensitive food costs decelerated to 3.8% from May's 6.4%.
The report also showed that producer price inflation fell by 2.1% in June, compared to expectations for a 1.9% decline. Producer price inflation declined 1.4% in May.