Industrial experts attending an iron ore meeting here this week agreed that the price in global market should begin to drop in June thanks to increasing supply.

Director Zou Jian of the China Metallurgy and Mining Enterprises Association described the market concern about Australian iron ore giant BHP Billiton's price hike request as "unnecessary."  Zou said while attending the 2005 China Iron Ore meeting in Beijing that the iron ore market will become a "buyers' market" next year.

Last week, the world's largest iron ore supplier BHP Billiton announced its plan to raise the price of iron ore sold to China from US$25 per ton to US$50.41. This provoked an unanimous outcry from China's 16 leading steel manufacturers.

Zou told the Economic Daily Tuesday that all of the world's three largest iron ore giants, lured by the rocketing market price, have sped up their production. For instance, the BHP Billiton's annual output has been raised from the 82 million tons in 2003 to last year's 110 million. This year, the number will rise to 145 million.

In the meantime, its major competitor, the Melbourne-based Rio Tinto, has projected a record high annual output of 171 million tons by 2006 while the world's heavyweight mining company, the
Brazil-based VCRD, planned to increase its annual output by 40 million tons between 2003 and 2006.

"Their ambitious plans have painted us a visualized picture of overplus as China, the world's largest iron ore importer, tightened its control on the steel industry, which will consequently chop the world's total demand," Zou said.

Statistics from the China Iron and Steel Association showed that the growth rate of China's steel output has declined from last year's 22.7 percent to the present 10 percent. The investment on China's steel industry over the first two months fell 9 percent over the same period of last year to 16 billion yuan (about US$1.93 billion).

As many Chinese companies vied to speed up their iron ore exploitation and production this year, the association predicted China's 2005 iron ore imports would be 240 million tons, about 40 million less than the number rumor had it.

Last week, the prices of iron ore imported from India dropped from US$97 to US$85. Deputy general manager Wang Qing of the Zhonggang Trade Company suggested business representatives attending the meeting be careful with starting iron ore exploitation business overseas.

"Fundamental changes are happening in the world's iron ore market. Precautions must be taken to avoid unnecessary losses," he said.

(Xinhua News Agency April 15, 2005)