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No matter how high the spot price of iron ore price negotiations on China's long association forced into the road to ruin
Browse4591   Published Date2009/8/22
Although the financial crisis and a series of events that can impact the world's largest mining company BHP Billiton iron ore production in the previous fiscal year less than previously forecast, but its sales efforts in the spot market but is increasing, from 20% of the total prior to 32%. And hope by the spot index price, but also BHP Billiton has yet to reach any one steel long-term agreement in 2009 iron ore price of important reasons.
Yesterday, BHP Billiton announced 2009 fiscal year (June 2008 ~ June 2009) financial report, in which iron ore production of 114.4 million tons, up 2%, far below the company's previous forecast of 1.3 million tons. BHP Billiton said iron ore output slowed down mainly by a series of accidents and the company projects production expansion and consolidation of the ongoing impact. 2008 fiscal year, BHP Billiton iron ore output had increased to 98.2 million tons by 1.1132 million tons, an increase of 13%.

Future trends, BHP Billiton believes that inventory and increased inventory due to the behavior of co-existence in the short term trend in global demand is still not clear, the future prices of commodities will be affected by the supply-side.

While the slowdown in iron ore production, but BHP Billiton increased the intensity of the spot market sales. 2009 fiscal year 68% of its iron ore region of Western Australia through the annual price sales, which means that 32% of the stock sale. Prior to BHP Billiton's iron ore in the spot market account for only about 20%.

BHP Billiton has been looking forward to "the end of a 40-year-old long-term agreement of iron ore pricing mechanism, changing the spot trade" vanguard of the current company is doing is precisely to sell stock to the steel price index.

It is noteworthy that, in the Rio Tinto and Brazil's CVRD has long-term agreements with Japan and South Korea after the price reached a year, BHP Billiton is still not with any steel price agreement reached by the year, and now they offer two options to customers, either for the last year has been ordered but did not complete the delivery of iron ore supply to pay compensation, or it will not change the number of completed sales to the spot index price.

The top 10 domestic production of a steel mill executives told reporters that BHP Billiton and Chinese steel mills have been implemented to explore the possibility of price indices, but did not get much response.

At present, with BHP Billiton also "alone" also has been engaged in arduous negotiations for 2009 iron ore in the steel association. Yesterday, the Public Ministry spokesman Zhu Hongren the letter said that in 2009 iron ore negotiations continued. As the negotiations stalled repeatedly, and China's iron ore imports continue to increasingly prosperous China is also passive.

According to Customs statistics, in the government crack down on traders to stockpile the most intense in June, China imported iron ore is still 55.32 million tons, ring than increasing 2.32 million tons, up more increased by 47%, a record 57 million tons in April since the history of time a new high, well beyond the market expectations. At the same time, 19-port iron ore stocks of 68.96 million tons, weekly ring than to reduce 1.77 million tons, indicating the part of imports are mostly absorbed.

Recently, there is a market rumor that Rio Tinto and BHP Billiton suspended iron ore exports to China, but the CBN reporter yesterday from a chartering broker was informed by "two extension" and did not stop shipments to China, only recently asking for more boats Price, hoping freight rates have come down.

China's strong demand for iron ore, but also to promote spot iron ore prices to 8-month high, spot prices fell as the likelihood of another is not. 1 to June China's total imports of iron ore up to 297.18 million tons, the cumulative growth of 29.3%. Last week, imports of ore pricing firm, such as India fine ore (Fe 63.5%) already present outside the disc offer CIF (CIF) 90 ~ 92 U.S. dollars / ton, according to spot sea freight terms, the current price of the new agreement, Brazil meal approximately 92 U.S. dollars / ton, Australian fine ores new agreement, the price is about 76 U.S. dollars / ton. Yesterday, India fine ore (63.5%) CIF value of the outer disc offering the highest price reached 93 U.S. dollars / ton. In accordance with the spot of sea freight is currently Brazil's long-term agreement powder ore CIF price of about 92 U.S. dollars / ton, Australia's long-term agreement powder ore CIF price of about 76 U.S. dollars / ton, can be said that imports of iron ore spot price in the interval of nearly 9 months later to re-price higher than the long association.
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