China's Iron Ore Demand to Increase 50 Million Tonnes in 2013

Iron ore demand in China could increase by 50 million tonnes this year, but it may not be sufficient to absorb the increased supply of the commodity.

According to China's National Development and Reform Commission (NDRC), crude steel production in the country could jump 30-million tonne this year, reports Reuters news agency.

China's own iron ore production is set to increase by 20 million while those from the top three major miners, Brazil's Vale and Australia's Rio Tinto and BHP Billiton, are together expected to produce a 100 million more. Global supply could rise about 300 million tonnes by 2015, NDRC said.

The excess supply could weigh on the already weak iron ore prices to dip further. The commodity's prices have struggled of late, retreating from the gains seen after the record drop in September.

"Looking at the trends, oversupply in iron ore is unavoidable," NDRC said, according to Reuters.

This planning agency's comments come as top Australian miners expressed concerns over the market earlier this month, suggesting that a weakening demand in China could weigh on prices this year.

Expectations of increased supply and weak demand had prompted Goldman Sachs to slash its price forecasts, suggesting that the commodity could touch around $80 per tonne by 2015.

China's iron ore imports rose 8.4 percent annually to 743.55 million tonnes last year, but steel output was just 3.1 percent higher as the country battled its worst economic conditions in about 13 years.

Iron ore demand in the world's second largest economy was expected to be higher in 2013 as the economy began to pick up and analysts forecasted a stronger Gross Domestic Product (GDP) rate.

Anticipating increased expansion plans in China that could see an increased iron ore demand, top miners had decided to ramp up production.

NRDC added that the lagging economic conditions in developed countries could also impact iron ore demand.

The commodity's price stood at $135.30 per tonne towards the end of previous week, after having touched $158.90 last month.