A new trading mode, named “Bidding”, is brought into iron ore market in recent years. Initially, Indian miners invite the public bidding for their iron ore which is still on the sea. The offer is calculated on the basis of spot price and ocean freight. Then the buyers give their offers. Finally, the participant, who gives the highest offer, is the winner.

And then Australian miners Rio Tinto and BHP Billiton join the wave in the wake of the disappearance of decade-existed annual pricing system. They even classify their clients. And only those with high reputation can be the bidders.

The new mode became more and more popular in the latter half of 2010. Even Brazilian miners were attracted. It is reported that the winners in the bidding are mainly big-scaled traders, instead of iron ore users steel mills. The phenomenon is contained big risk, from the viewpoint of steel mills or insiders, citing that winners will resell the iron ore to end users with a higher deal; the move will finally push up spot market.

For example, the miner will tag its product at US$ 192 per tonne, versus the current spot market of US$ 190 per tonne. One buyer, who anticipates a boomy market in the future, may finalize the vessel of iron ore at the deal of US$ 192 per tonne. And then, he may successfully make a fortune of 2 dollars a tonne by selling the vessel to other steel mills. Spot market, as a result, is boosted by the overseas miners.

The speculative behavior may develop stronger and stronger, and should draw great attention from Chinese steel team, government as well to work out the countermeasures to fight against this a vicious circle.

It has been forecasted from MEPS that world steel output at 1350 million tonnes in 2010. This will be an “all-time” high figure and represents an increase of approximately 11 percent over the anticipated outturn in the previous twelve months.

Blastfurnace iron production is also predicted to reach a record level in 2010. At 994 million tonnes, it would be almost 11 percent above the result a year earlier. Further significant gains are foreseen in 2011.

The last peak year for global iron and steelmaking occurred in 2007 at almost 947 and 1345 million tonnes, respectively. Our latest forecast for 2010 indicates that the return to past glory will take just three years. This compares with five years in the early 1980’s and eight years in the 1990’s.

The current short recovery period is almost entirely due to the economic stimulus packages put in place by the Chinese government. With China accounting for almost 50 percent of both supply and demand, strong activity in this country, will have a positive impact on the global steel scene.

The final figure for world steel output in 2009 is expected to be 1217.5 million tonnes – down by 8.2 percent, year on year. Blastfurnace iron production is predicted to have slipped to 896 million tonnes in the same period. This is 3.3 percent below the 2008 figure. Direct reduced ironmaking in 2009, at 62.3 million tonnes, will be an annual decrease of 9 percent.

Only four of the major producing countries in the world will post increases, year on year, for crude steel manufacturing in 2009. A substantial rise in Iran and modest improvement in Saudi Arabia will lead to gains in the Middle East. Substantially higher activity in the Chinese steel sector and steady progress in India will result in total Asian supply rising by in excess of 3 percent.

We predict output gains across all regions over the next two years. Double digit percentage increases are anticipated for most of the industrialised nations in 2010 as they partly recover from large reductions in the previous twelve month period. More modest rises are envisaged for the developing countries in the CIS, Africa, South America, Middle East and Asia.

The 2009 steel output in the EU-27 will be close to 138 million tonnes – 30 percent below the outturn in the previous year. Double digit reductions in steel manufacturing took place in all the nineteen producing member states.

The mills in Belgium, Bulgaria and Sweden took the biggest hit with almost 50 percent decreases in output. Greece, Luxembourg and Slovakia were the least badly affected.

Raw steel production in the rest of Western Europe in 2009 will be approximately 29 million tonnes. This represents a reduction of almost 9 percent on the result in the previous year. The outturn for blastfurnace ironmaking will be marginally down, due to new capacity installed recently in Turkey.

Crude steelmaking in the CIS showed a mini revival in the second half of 2009 but still recorded a figure of below 100 million tonnes for the first time since 2001. The year on year decrease was close to 15 percent. Local demand in most countries of the region has started to pick up. We forecast blastfurnace iron and steel production in 2010 rising to 77.6 and 100.5 million tonnes, respectively – an increase of approximately 8 percent over the previous year’s figure.

The global recession had a major impact on the steel sector in the NAFTA region in 2009. Output fell by one third, year on year. The integrated mills took the biggest hit. Blastfurnace iron production fell by approximately 40 percent across the region.

South American steel production declined by just above 20 percent, year on year, in 2009. Both domestic and export demand fell dramatically as the global economic recession set in. On a positive note, output started to recover in the second half of the year. Further gains are predicted to occur in 2010 and 2011 in both iron and steelmaking. In fact, we forecast a new record high level of steelmaking in the region in the latter year.

Total African steelmaking in 2009 fell by approximately 20 percent, year on year. However, we predict a solid recovery in 2010 but it will be insufficient to reach the outturns in the period 2006 to 2008. In fact, it is likely to be several years before new record high levels are achieved.

Middle East steel production continued to prosper in 2009, despite the global economic crisis. Output will be an “all time high” at well in excess of 17 million tonnes. Further solid growth will occur in the following two years as new plants come on stream. Steelmaking should climb to near 20 million tonnes in 2011.

Crude steel output in Asia in 2009 was approximately 3 percent above the figure reported in the previous year. At over 790 million tonnes, this is a new record output and represents eleven consecutive years of growth. New all time peak values are forecast for 2010 and 2011.

Most of the expansion of steelmaking has been undertaken, via the blastfurnace/oxygen steelmaking route. Consequently, pig iron production has also increased to reach a figure of approaching 675 million tonnes in 2009. This pattern will extend well into the future.

It is said from Energy and Mining Minister Edison Lobao that Brazil may start taxing iron-ore exports in a bid to encourage steelmakers to invest to boost domestic output.

“We are thinking about imposing an export tax on iron ore and remove taxes on finished” and value-added goods such as steel and steel plates, Lobao said today in an interview at his office in Brasilia. “The Finance Ministry would have to agree on it.”

The Finance Ministry didn’t immediately return calls seeking comment.

It is said from president and CEO of Baffinland Iron Mines Corp. that it may be able to secure the cash to develop an iron mine in Nunavut this year.

Gordon McCreary said Sunday that Baffinland needs to raise at least $4 billion to develop the Mary River site 160 kilometres south of Pond Inlet on northern Baffin Island.

At least $1 billion of that funding must come from a partner for the project to proceed, he added.

“My view is that that will happen in 2010,” McCreary told reporters on Sunday, during a company-led tour of the Mary River site.

“If, for whatever reason, it doesn’t happen in 2010, my job as the CEO of this company is to make sure that we’re bridged into 2011, because it will happen in 2011.”While no deep-pocketed partners have come forward to date, economists predict that rising demand for iron ore will soon drive up prices, perhaps by as much as 30 per cent.

“It increases investor interest in them, and also increases the chance of getting that kind of strategic investment,” said Patricia Mohr, vice-president of industry and commodity research with Scotiabank.

McCreary said an investment would have made by now, had it not been for the global financial crisis that hit in 2008.

Baffinland organized Sunday’s tour for politicians, bureaucrats and journalists to view the Mary River site during the high-level meeting of G7 finance ministers and central bank governors in Iqaluit over the weekend.

None of the foreign finance ministers attended the tour, but McCreary said he met with Canadian Finance Minister Jim Flaherty for 45 minutes.

McCreary said he also met with the finance minister of Germany, which offered Baffinland $1.2 billion in loan guarantees last year.

It was reported from the government that China discovered five billion tonnes of iron ore deposits last year.

More than three billion tonnes were located in the northeastern province of Liaoning, with the rest found in Hebei, Shandong, Anhui and Sichuan, said Zhang Hongtao, chief engineer of the Ministry of Land and Resources.

One billion tonnes of reserves in Hebei would be easy to mine because of their shallow depth, said Zhang, quoted in a statement posted on the ministry’s website on Friday.

China, the world’s biggest producer of steel, is also the largest importer of iron ore, importing around 50 percent — or 443.45 million tonnes — in 2008.

Steel production over the first nine months of last year added up to 618.6 million tonnes, according to the China Iron and Steel Association.

Each year, Chinese steelmakers enter bitter negotiations with the world’s top three mining giants — Brazil’s Vale and Anglo-Australian companies Rio Tinto and BHP Billiton — over the price they will pay for iron ore.

Annual iron ore pricing negotiations traditionally begin with Japan around November and take place alongside similar negotiations. China and Beijing’s massive imports have been a prime driver for price rises in the past few years.

The three firms have sidelined Beijing from annual talks to set a benchmark contract price, the Financial Times reported earlier this week.

The companies plan to present a “take it or leave it” price to Chinese steel mills once negotiations with Japan are complete, the report said.