Interfax-China reported that about half of China iron ore miners have suspended production in the face of dwindling profit margins due to the low price of imported ore.
Mr Zhao Peng analyst with industry consultancy Lange Steel said import prices fell some 30% in October, encouraging steelmakers to buy up the higher quality foreign ore and putting pressure on domestic miners. He said that iron ore grading 66%in Tangshan is priced around CNY 950 per ton at present, but domestic miners need a price of about CNY 1,000 to break even. About half of domestic miners mainly small and medium-sized firms have consequently ceased production.
According to the National Bureau of Statistics the production suspensions come after China iron ore miners raised output in the first three quarters this year in line with climbing prices with 66-percent wet ore hitting CNY B 1,230 per ton in Tangshan at the end of September. Domestic output grew 24.5%YoY during the period to reach 946.23 million tons.
The global mining giants have adopted a more cautious outlook on prices next year. Mr Jose Carlos Martins, strategy director for Brazil's Vale SA, earlier predicted prices could bottom out at USD 120 per ton much lower than this year average of USD 165.