By Wan Zhihong (China Daily)
Updated: 2007-12-21 07:30

China, which produces one-third of the world's steel, will see 15 percent growth in iron ore imports this year, an industry group said.

"This year the country is expected to have imported 375 million tons of iron ore, an increase of 49 million tons from 2006," Luo Bingsheng, vice-chairman of the China Iron & Steel Association (CISA), said Thursday.

Rapid development of the domestic steel industry has resulted in booming demand for iron ore. The country imported 349.03 million tons of iron ore from January to November this year, up 17.3 percent from the same period of 2006.

It is the biggest buyer of iron ore on the global market, accounting for nearly half of total trade.

Domestic iron ore production will also see double-digit annual growth. This year the figure is expected to reach 700 million tons, Luo said.

But the nation's steel industry has an increasing dependency on imported iron ore, he said.

"Domestic steel companies should do more to ensure a steady iron ore supply in the long term."

"They should take an active part in developing overseas mining assets," said Luo.

As for iron ore prices in 2008, Luo said it was inevitable to see an increase. For the first 11 months, the average iron ore price was $84.25 per ton, an increase of 32.36 percent, the CISA said.

The rising price is mainly due to soaring marine transport costs, Luo said.

"But the recent rise in marine transport costs is unusual and unreasonable," he said.

Some iron ore producers are also manipulating the market, causing unreasonable price increases, he said.

From July to October, the price has risen at a faster pace.

In November, the average price was $112.78 per ton, a record high, the CISA said.

Rising prices have put pressure on domestic steel companies, squeezing profit margins.

Earlier media reports said the steel industry is lobbying the central government to establish a national iron ore reserve to secure supplies of the raw material.

Speculation on the soaring price of iron ore intensified as Melbourne-based BHP Billiton Ltd, the world's second-largest mining resource giant, raised a billion-dollar bid to take over London-based Rio Tinto.

If the deal goes through, the combined company would take nearly 40 percent of the global iron ore export market.

Analysts said it could drive up prices further, as the two companies would have greater bargaining power after the merger.

The two mining giants together account for just under two-fifths of China's imports of the commodity.