Chinese steel industry concerned over expected price hikes

A senior official at the China Iron and Steel Association recently expressed concern about the ongoing 2008 international iron ore price negotiations, estimating that iron ore prices will go up by 35-50% next year, China Business Times reported (in Chinese). Luo Binsheng, a vice chairman of the association, named strong demand as the main cause of the price increases, though control of global supplies by only three companies – BHP Billiton, Rio Tinto and CVRC – and rising freight costs are also factors. China's steel production capacity increased by 50 million tons in November over the same time in 2006, while consumption has risen 12% over last year, said Luo.