Reading through the weekend paper I caught this article and it was the first three paragraphs that took my breath away by very clearly defining and making personal the size and extant of China’s appetite for Steel and resources. Enough Iron Ore to build a Sydney Harbour Bridge coming through the port every 12 hours? and this port represents just one-sixteenth of China’s iron ore imports? 
To put this another way, China is importing enough iron ore to build a Sydney Harbour bridge in just 45 minutes, and they do this around the clock. (OK, for the Empire State Building it would be 50 mins.)
To put the second paragraph in context for non-Australians, Brisbane’s population is around the 1.8 million mark, so build a city of 1.8 million people each month, ever month.
Regardless of how you slice and dice it this is a hell of a lot of iron ore - and when you appreciate that Coal is one of the other main components that goes to making Steel it becomes a lot more apparent why John Howard has been reluctant to tie Australia to the Kyoto Agreement as we might then become liable for the Carbon Footprint created by the amount of Coal we export.
How much Coal does Australia export?
Source: IEA Key World Energy Statistics - 2004 and 2005 editions.
The big steel (from SMH.com.au)
October 6, 2007
Spot prices for gold and iron ore have shot up on the back of China’s construction boom, challenging the tradition of price benchmarking, writes John Garnaut.
Huangdao was once a forgotten fishing village, a short ferry ride from the beer and beach town of Qingdao. Now, a dozen years later, it is Australia’s entry point to the world’s largest and fastest industrial revolution. Every 12 hours, Huangdao’s waterside workers handle enough iron ore to make the steel coat hanger and support beams for the Sydney Harbour Bridge. That’s 50 million tonnes of ore - 625 harbour bridges passing each year through the world’s largest and most efficient iron ore unloading terminal. And yet Huangdao accounts for just one-sixteenth of China’s total iron ore use.
This year China will need enough ore to make enough steel to build high-rise apartments for 19 million new urban migrants, produce 8.5 million cars, complete 17 major city airports and roll out tens of thousands of kilometres of railways, tunnels, bridges and elevated highways. As Phil Mitchell, Rio Tinto’s iron ore development manager, likes to put it: "China is building from scratch a city the size of Brisbane every month."
And yet this country of 1.3 billion people is only now entering the most resource-intensive phase of its urbanisation and industrialisation - a revolution that could keep rolling on for another three decades. Car production is rising 46 per cent a year. Fixed-asset investments (such as factories and bridges) account for nearly half of China’s GDP and are growing at 26 per cent.
Figures such as these explain why spot (non-contract) prices for iron ore and coal - the two core ingredients of steel - have risen 71 per cent and 38 per cent respectively this year. China’s iron ore imports have risen eight-fold in just eight years. China has doubled coal consumption in five years, turning it from exporting to importing and pushing up prices paid by Australia’s key coal customers in Japan and Korea.
As luck would have it, Australia exports more coal and iron ore than any other country. The resulting improvement in our export prices has added an extra percentage point of national income in each of the past four years (and will probably do the same this financial year) - without us having to do a thing. It explains why Australia’s sharemarket is booming and the country is enjoying the greatest and longest stretch of prosperity it has known. "Australia has never seen a terms-of-trade boom of this magnitude for this length of time," says David Rumbens, a director of Access Economics.
China’s extreme appetite and Australia’s generous endowments also explain why China’s President, Hu Jintao, recently spent a week touring Western Australia, Sydney and Canberra despite preparing for his most important political showdown in five years - the 17th Communist Party Congress. If there’s anything that could force China’s engineer-president to focus his mind here, it is that China desperately needs Australian resources as cheaply as it can get it.
The upcoming iron ore contract price negotiations between Australia and China will be a showdown between the world’s most efficient miner and its greatest manufacturer. It is a contest of national pride, executive ego and billions upon billions of dollars. "It will be compelling viewing," says one participant.
…
Benchmark contract prices from Australia and Brazil jumped by 9 per cent in 2003 then 18.6 per cent, 71.5 per cent, 19 per cent and 9.5 per cent this year. On top of this, spot market freight costs from Brazil have risen to exceed the cost of the cargo this year because ship builders have not kept up with the huge rise in iron ore and coal exports.
…
And then the steel makers still have to get the ore to their inland blast furnaces. Trucking prices to central Shandong province have jumped by 40 per cent this year, as truck drivers navigate a government road safety crackdown.
Trucks that once carried 90 or even 100 tonnes are now forced to carry just 40. Another proprietor, who would not give her name, said there were 15 police checkpoints on the 90 kilometre road from Zibo, central Shandong, to the provincial capital of Jinan.
"Now we have to use three trucks to do what one used to do," says the boss of a small freight broking company called Zibo Tongshun. "So much to move but so few trucks," says another freight broker.
One truck driver says police were pulling overloaded trucks off the road - until drivers paid bribes to have them released. Another, from a Jinan trucking company, says he got through the checkpoints with little fuss because his company had centralised bribe payments through the local police station. "The police just look at the company name and wave me on," he says.
…
Last month, Xinhua reported figures from Zhang’s own association showing China’s 77 biggest steel makers increased their sales revenue by one-third to 1.1 trillion yuan in the first seven months of this year compared with the year before. Incredibly, after-tax profits were reported to have risen by 91.5 per cent.
Away from the heat being generated in China and Australia, analysts seem to think China’s steel revolution has a long way to run. Jae Jun, head of research at Franklin Templeton Korea, said the world’s steel makers still had pricing power and were simply passing higher costs onto downstream manufactures.
"Demand for steel products is strong due to the increasing demand for infrastructure and construction in Asia, Middle East and other emerging markets," he says. "The supply for steel is also increasing but not fast enough to catch demand growth."
Steel and iron ore supply may be increasing, but demand is shooting through the roof. The good money is being put on a price rise in the vicinity of 50 per cent this year - enough to almost guarantee that Australia sails through any American economic downturn.
much more at source…
The big steel - smh.com.au
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