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A few days after the China Iron & Steel Assn (Cisa) warned that the country’s dependence on imported iron ore will soon exceed 80% as domestic mines struggle to compete with the mining majors, the Chinese government abolished a requirement for metallurgical miners in China to set aside cash reserves meant to ensure their continued operation.
The move is the latest by Beijing aimed at ensuring the survival of Chinese miners amid weak international commodity prices, particularly those for iron ore and coking coal.
Meanwhile, major miner Rio Tinto will continue its low-capital-cost brownfield expansions in the Pilbara region in Western Australia this year, ceo Sam Walsh said at the company’s annual general meeting in Perth on Thursday May 7.
A potential reduction in iron ore output by Brazilian mining major Vale was being viewed with caution by mining analysts.
The recent iron ore price rally has made the market surplus worse, as smaller mines come back online while those that would have cut production have now delayed that decision, according to Citi analyst Ivan Szpakowski.
"The rally is just going to make the situation over the next few months even worse. If anything, it creates opportunities for the market to fall even harder afterwards," he told Steel First in an interview.
Szpakowski topped Steel First’s poll of analysts making iron ore price predictions for the first quarter of 2015.
The latest issue of Steel First’s monthly China Insight newsletter looks at the slowdown in the country’s industrial sector, the stock market bubble, the retrenching of domestic iron ore producers and the pressure on steel prices.
ArcelorMittal’s core earnings were down by more than one fifth in the first quarter, as a strong performance in its Europe steel segment was offset by a slump in its mining division.
The world’s largest steelmaker saw its European earnings increase by 40% year-on-year in Q1 2015, thanks to cost reductions and improved EU demand.
The company continued to see the earnings from its mining operations plunge during the first quarter of this year on subdued iron ore prices.
In the Americas, ArcelorMittal plans a shake-up of its US operations, while in Brazil it saw earnings dip by 11% on lower realised steel prices.
Around the world
Demand for oil country tubular goods (OCTG) in Iran could more than triple in the medium- to long-term, according to a report published by Steel First sister company Metal Bulletin Research (MBR).
In Europe, French tube & pipe producer Vallourec said it will eliminate 1,500 jobs, with 900 being axed in France and 600 in Germany.
In our weekly Steel First Outlook column, MBR examined the fortunes of long products suppliers from a demand and pricing perspective.
Steel First has announced the launch of a weekly Taiwan import ferrous scrap assessment.
The Brazilian government has reduced a definitive anti-dumping tariff on imports of seamless steel tubes from Ukraine.
Australia is investigating allegations that South Korea and Taiwan have been modifying their galvanized steel for export to avoid payment of anti-dumping duties.
Meanwhile, the country has reduced a provisional dumping duty imposed on imports of rebar from one Malaysian exporter and from all exporters from Spain.
Editor Vera Blei looks at the main news covered by Steel First over the past week.