Chinese domestic iron ore output soars by 27pct in June

China's monthly iron ore output leapt by a quarter to the second highest ever in June as demand for steel strengthened and prices rose, while steel production hit an all time peak.

The 27% jump in iron ore output, to 83.3 million tonnes, will reassure local steel mills that are facing uncertainty over imports of iron ore because of the allegations of spying leveled at Rio Tinto employees involved in China's annual price negotiations.

A slump in prices early this year forced China's relatively high cost iron ore mines to cede domestic market share to importers, who have shipped unprecedented amounts to China for the last three months. With a revival in the international market, domestic production has rebounded.

Some analysts had estimated China closed nearly 20% of its ore mines this year. But spot iron ore prices delivered in China have steadily risen to above USD 80 a tonne and some Indian ores are offered at around USD 90 a tonne, making them more expensive than Chinese spot material for the first time nearly in a year.

Mr Hu Kai analyst at industry consultancy Umetal Research Institute said "The trend is expected, as imported iron ore prices have been higher than domestically produced, encouraging local miners to resume production. Production will keep rising in July as more mines are reopening."

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