China Quake Leaves Commodities Alone

When the earthquake struck the Qinghai province in China Wednesday, the iron-ore spot price index increased only slightly.
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Unlike the recent earthquake in Chile that hurt Chile's copper output and resulted in a sharp increase in the commodity's price, the latest earthquake in northwest China's Qinghai province is likely to have a minimal impact on the commodity market.

Although the province accounts for only 0.3% of the Chinese economy, Qinghai has three large iron-ore deposits of consequence to the total domestic iron-ore supply. Each of these deposits was estimated to have a potential reserve of more than 50 million tons with the largest exceeding 100 million tons.

On Wednesday, when the earthquake struck the Qinghai province, the Chinese iron-ore spot price index -- in Hebei/Tanshan -- increased only by 0.72% to 1,400 yuan a metric from 1390 yuan. In fact, the index did not register any price increase the following day. In comparison, the price index had been on the rise for a few days prior to the earthquake, increasing 3.78% and 1.46% on Monday and Tuesday, respectively.

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In addition, steel products didn't witness any unusual increase in prices over the past two days. China domestic cold-rolled steel sheet spot average prices, hot-rolled steel sheet spot prices, and steel rebar prices have increased only by 0.36%, 0.47%, and 0.10%, respectively since the earthquake.

Northwest China's largest specialty steelmaker

Xining Special Steel

was reported to have been untouched by the earthquake. The company has been performing well as reflected in its latest results declared Tuesday, which showed a 315% jump in net profits for 2009.

Meanwhile, cement producers based in northwest China gained Wednesday on the anticipated reconstruction efforts, according to

Xinhua

.

Xinjiang Tianshan Cement

jumped 6.58% on the Shenzhen SE composite Index, and

Gansu Qilianshan Cement

gained a sharp 5.01% on the Shanghai SE composite Index.