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Mining giants blamed for soaring iron prices

By Xiao Xin (Global Times)

08:32, February 01, 2013

The recent hike in prices of imported iron ore has been driven by dominant global mining firms which have made improper moves to support prices, Zhang Changfu, vice president and secretary-general of the CISA, said Thursday, calling for attention and efforts from relevant Chinese government departments to help maintain market fairness.

Between late December 2012 and the middle of January, the cost of imported iron ore soared from $115 per ton to $159 per ton, up about 40 percent, translating into an increased cost of 422 yuan ($67.82) for domestic firms to produce a ton of steel, he said.

During the period, steel prices in the domestic market only rose by around 106 yuan per ton.

"This will certainly harm domestic steel makers' profits," Zhang told the Global Times, noting that in particular one large purchase of iron ore by an international mining firm had boosted prices just as they were starting to trend downward.

Zhang did not mention the name of the firm he was talking about, but on January 16, BHP Billiton, the world's third largest iron ore mining firm, bought 100,000 tons of the raw material, which market watchers believe was intended to prevent a drop in prices.

Chinese steel mills have been replenishing their stock because of rising demand, and this has also contributed to the rise in iron ore prices, said Xu

Xiangchun, information director with industry consultancy

But the main reason for the rise was the "unusual actions" by the iron ore mining companies, Xu noted.

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