Falling iron ore imports are unlikely to lead to an imminent reduction in handling costs at Chinese ports, according to a report by Securities Times. Representatives from the coastal ports of Rizhao and Tianjin said their ports had no plans to reduce iron ore handling costs. Rizhao has already increased handling costs twice in 2008 and a reversal was unlikely due to the fact that its throughput remained much greater than handling capacity.
The China Ports and Harbours Association said that it had heard of no handling cost cuts among its members so far, nor of any plans to introduce them. This is despite an expected surge in China's iron ore handling capacity over the next two years as a result of the recent investment by ports in iron ore docks in response to surging ore import levels over past years.
Now, as a result of the global economic downturn and its impact on the steel industry, import levels are falling fast. According to official data, China imported 30.62m tons of iron ore in October, a fall of 21.9 per cent on the previous month’s total.
According to a subsequent report in Caijing, Chinese steelmakers are set to ask major iron ore suppliers to slash next year’s benchmark prices. Annual contracts are set to begin next April and one analyst said Chinese steel companies may seek cuts of up to 40 per cent. Shan Shanghua, secretary of the China Iron & Steel Association, said that steelmakers are now buying ore for about US$50 per ton on the spot market, even though prices under the current year’s contracts with Australian suppliers are around US$90.