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China Quake Leaves Commodities Alone

When the earthquake struck the Qinghai province in China Wednesday, the iron-ore spot price index increased only slightly.

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

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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



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.