Soaring iron ore prices expected to slow
China's iron ore price index continued to rise in June, but the dramatic increase will not last long, according to the China Iron and Steel Association.
The price of imported iron ore price rose 11.7 percent month on month and 71 percent year on year.
Steel enterprises have been heavily affected. In the first five months , revenue of member companies of the association increased 10 percent to 1.7 trillion yuan (US$250 billion). But their net profits plummeted by 18 percent to 85.5 billion yuan.
The profit margin of steel companies was thus only 5 percent, lower than national industrial average.
The dramatic rise is unlikely to last, as the steel production will be reduced, under strengthened environmental protection and reducing excess capacity during the summer.
The daily production of crude steel in June was 2.85 million tons, declining 0.8 percent from May.
Increased use of steel scrap in steel making and the increase of domestic iron ore production all work to improve the supply and demand situation, according to the CISA.