The global iron ore price is expected to fall in the year 2006, as China's demand will drop and global supply will increase by 62 million tons, Beijing Youth Daily said on Monday, citing a recent report on iron ore supply and demand published by the China Iron and Steel Association.

According to the report, China will import 40 to 45 million tons of iron ore next year.

As a world major iron ore consumer, China's demand plays a pivotal role in the fluctuations of global iron ore prices, which hiked by 71.5 percent earlier this year.

The association predicted that the global iron ore supply and demand will be basically balanced next year, or that the supply will even surpass the demand.

"It is reasonable for the price to fall," the association report said, adding that high prices hurt the interests and development of China's iron and steel industry, which, in turn, will have a negative impact on the global iron and steel industry.

In the first eight months, China had 10 million tons of surplus iron ore due to shrinking demand, which resulted in the implementation of the government's new policies which encouraged the merger, regrouping and closures of iron and steel firms with small production capacity and low production efficiency.

It was reported that a world iron ore conference is being held on Monday in Qingdao, a port city in east China's Shandong Province, with the participation of Australian mining giant BHP Billiton and Brazilian iron ore supplier CVRD, who was allegedly demanding a 10 to 20 percent price rise, citing insufficient world supply as the reason.

Industry insiders predict that the industry faces "another round of hard gambling."

Source: Xinhua