UMETAL-CHINA, China's import market of iron ore steadied this week, with spot prices changed a little at ports. Notably, continued increases in freight rates from India to China brought up CIF prices of Indian iron ore and thus Indian fines 63.5 per cent were currently offered at $75 per ton in part. However, most traders hoped to cut inventory by the end of this year, and Chinese steel market had not yet improved a lot. As a result, iron ore market is unlikely to see a significant rebound in the near future. This week Australia's BHP Billiton withdrew pursuit of Rio Tinto, which would play a big part in the 2009 contract price talks.

In the same week, BHP Billiton said on November 22 to reduce its Samarco's annual iron ore pellet production capacity in Brazil. Sarmarco will close two of its older plants from the end of November until mid-January. Whether Samarco will restart production depends on the market by then. So far, the three mining giants have all flagged production cutbacks that may reach up to 35 per cent in the fourth quarter of this year.

On November 26, China government slashed interest rate by up to 1.08 per cent, the largest reduction in 11 years. It will hopefully fuel Chinese economy growth in the future, and the following steel industry will recover faster than expected thanks to the infrastructure development as well as stimulus plans. Umetal analysed.