China has a 1,000 mini-mills turning out cheap

China has a 1,000 mini-mills turning out cheap construction steel, rebar, support beams, pig iron etc. that consumes most of the China Sea Borne Trade, since only a few of them have captive iron ore reserves, that has been the catalyst that has driven the Spot Trade over the last couple years, construction is down now in China, waiting for the Gov to give it another shot of stimulus to drive the overheated economy. On the other hand, POSO in South Korea, Nippon and Sumitomo in Japan have both Captive Iron Ore and contracts with the Big 3 for Grade A Iron Ore to manufacture quality steel products, so it’s a totally different situation than China. Now there is a big push by China from its larger mills to find Captive Iron Ore Reserves so they can get a better position in quality steel product sector. Since U.S. Steel pulled out of the J/V with Vale in Brazil years ago, now the Big 3 control most of the world’s biggest iron ore reserves making it very difficult of other China’s big mills to acquire Captive iron ore.. BaoSteel was able to acquire a large Iron Ore Reserve in Brazil just a few months ago, which will give them a little better edge over some of the other Chinese Mills.. Only time will tell how all this will play out for small operators, but I suspect there will always be some market for the smaller mines, let’s hope so anyway..