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Iron ore and coal. Why it is all about China.

|Includes: BHP Billiton Limited (BHP), RIO, VALE

We hear a lot about the BRIC countries. The plot below -- world crude steel production this decade as of end of August -- pretty much sums up why it is all about China, the "C" in BRIC, when it comes to iron ore and metallurgical coal demand. The plot shows the enormous growth in Chinese steel production this decade, compared to the low growth in the other three BRIC group and the rest of the world.

world crude steel production

Iron ore producers took a hit in pricing negotiations this year--admittedly from high price levels in 2008. The pick up in Chinese steel production this year is good news for iron and coal producers for 2010 pricing if this recovery in Chinese steel production is sustainable.

Disclosure: long BHP, long Gindalbie Metals (ASX listed)