China’s booming auto market demand may push steel demand in the country by 12% next year, lifting the prices of iron ore, Bloomberg reported today, citing an industry expert.
Domestic crude steel consumption may increase to 606 million metric tons in 2010, following a 14% gain this year to 541.4 million tons, said Luo Wei, a Shanghai-based analyst with China International Capital Corp. Benchmark contract prices for iron ore, used in steelmaking, may rise 15% to 20%, he said.
Steel prices in the country have risen 10% from this year’s Oct. 15 low as manufacturers and traders deplete stockpiles and mills raise prices because of rising costs. Automobile and property sectors would be the big engines to drive up steel demand in 2010, the expert said in a report.
China’s auto demand will have “high growth rates” next year, and there’s “good prospects” for home appliance demand as the Chinese government boosted rural sales with its stimulus spending, Baosteel, the largest Chinese steelmaker, said earlier this month.
The steel price revival will hamper China’s ability to bargain contract iron ore prices paid to Rio Tinto Group, BHP Billiton Ltd. and Vale SA. Prices may jump 14% in 2010 to the second-highest on record, according to Bloomberg News.
Overall vehicle sales in China may reach 13 million units this year, up from last year’s 9.38 million, said an auto industry official last week. If the government incentives extend, China’s auto sales can grow by 10% or more in 2010.