AME Mineral Economics said iron ore demand, now about 1.1 billon tonnes a year, will rise by more than 250 million tonnes a year by 2008 because of demand for the metal from China where stainless steel had become a status product.

China's infrastructure and manufacturing expansion would catapult Asian steel output to almost match the rest of the world's entire production by 2008.

The large Chinese iron ore industry is characterized by low grades and output has long been insufficient to meet domestic demand with the consequence that the country is heavily import-dependent. The enormous increases in Chinese steel production from 2000-2003 gave rise to substantial growth in imports, which doubled to 112Mt between 1999 and 2002 and were 44% higher in the first quarter of 2003 than in the same period the previous year. That rapid growth appears to have taken the world's iron ore producers by surprise and, coming at a time when steel production in most other countries is also growing, has eliminated any surplus of iron ore output and exerted upward pressure on prices.

Currently, India accounts for about 9% of global iron ore exports. Due to India's locational advantage viz-a-viz China, India benefits from lower freight costs. Also, India's iron-ore is of very high grade. STUDIES and analyses suggest that India can have greater scope than at present to supply iron ore to China, if only the competitiveness of Indian exporters improves.As per projections, its imports are likely to touch 150 mt by 2005. It deserves mention that its iron ore imports were just 44 mt in 1996.