Brazil CVRD sees China iron ore demand up 8 pct/yr

Brazil CVRD sees China iron ore demand up 8 pct/yr

Brazil’s Companhia Vale do Rio Doce (CVRD), the world’s top iron ore supplier, sees Chinese demand for the mineral growing at an average annual rate of 8 percent through 2012, Macquarie Research said on Wednesday. Macquarie quoted Renato Paladino, CVRD’s chief China representative, as saying global iron ore seaborne demand would grow by 250 million tonnes between 2007 and 2012, with 76 percent of the growth expected to come from China.

Driven by Chinese demand, the iron ore market was likely to remain especially tight this year, with an expected deficit totalling 6 million tonnes, the CVRD official told Macquarie.

Strong demand for iron ore by China, the world’s top steel producer and iron ore importer, has also pushed up dry bulk freight rates to historic highs, especially as it buys increasing volumes from distant Brazil.

Official data showed Chinese steel output as well as steel product exports hit monthly records in April as many steel mills expand to cash in on high prices of the metal at home and abroad. To reduce freight rate volatility for its Chinese customers, Paladino said CVRD was building dedicated shuttle services, with a total ship capacity of 2.46 million DWT by 2011, including four especially large Chinamax vessels of 390,000 tonnes.

To meet rising demand, CVRD is expanding iron ore output towards 300 million tonnes this year from 264 million last year. It expected to reach 450 million tonnes in 2011.

Information from: Reuters

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