"CRU: 'Little Chance' Iron-Ore Price Will Rise As Global Supplies Grow," at 10:00 p.m. ET on Wednesday, incorrectly stated that Chinese steel production was relatively weak in the first quarter, in the third paragraph. CRU clarified that hot-metal, or iron, output in the first quarter in China hit a new record level during the first quarter, as did Chinese imports of iron ore. In addition, CRU is forecasting that iron-ore exports from Australia and Brazil will rise by an additional 80 million metric tons a year between 2014 and 2016, not 18 million tons per year, in the sixth paragraph. The correct version follows:
SAO PAULO--There is "little chance" that iron-ore prices will rise significantly for a considerable period due to increases in market supplies, particularly from Australia and Brazil, a CRU Group analyst said Wednesday.
Indeed, spot prices for the raw material used to make steel should continue to decline slightly from their current levels of nearly $140 a metric ton delivered to China until 2016, Paul Scott, CRU's group manager - steel, told delegates at the Brazilian Steel Institute's annual congress in Sao Paulo.
Iron-ore spot prices were 20% lower in the first quarter than they were in the same 2011 period, despite hot-metal production and iron-ore imports both reaching a new record level in China in the first quarter, according to CRU. Chinese steelmakers, which consume around 60% of world seaborne iron ore, made net losses in the first quarter, their first losses since 2000, Mr. Scott said.
"At the same time as iron-ore demand has moderated, supply from major suppliers has increased sharply," Mr. Scott said, adding that this has been due mainly to recent more-favorable climatic conditions in Australia and Brazil, which has led to higher exports.
Growth in Chinese steel demand is now expected to slow to 4% to 5% annually, lower than in recent years when steel-demand growth typically exceeded the rates of growth of China's gross domestic product, according to Mr. Scott.
Still, "iron-ore exports from Australia and Brazil will increase sharply," by more than 80 million metric tons a year between 2014 and 2016, particularly from Australia, where new projects will start up, he said.
Australia should increase its stake in the total iron-ore export market to nearly 50% by 2016, Mr. Scott said.
The saving grace for the world's big iron-ore exporters, which includes BHP Billiton PLC (BLT.LN, BBL), Rio Tinto PLC (RIO.LN, RIO) and Vale SA (VALE, VALE5.BR), is that China is becoming increasingly dependent on imports of iron ore as some of its own high-cost iron-ore mines are unable to compete in a lower-price environment, he said.
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