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Iron ore "China price" bleak future
Browse4931   Published Date2009/8/22
A few days ago, sources said Rio Tinto espionage occurred, China Steel Association to stop the negotiations with Rio Tinto in favor with the world's largest iron ore producer Vale do Rio Doce hold price negotiations. The Chinese side hopes to more imports of iron ore from Brazilian companies for the conditions to allow the latter to accept a lower base price of iron ore agreement. However, yesterday evening, Vale do Rio Doce to finalize a long association with the Italian price makes this kind of "wishful thinking" may be lost again.
"China price" or to be aborted

In fact, this year's iron ore negotiations, "China price" appears likely to become increasingly elusive. Yesterday, Brazil's CVRD and Italy's largest steelmaker Riva set an annual benchmark iron ore prices in 2008, based on the powder ore prices fell 28.2%, pellet prices fell 48.3%. This is before the CVRD and the world's major steel mills to determine the rate of decline in line.

June 10, mutatis mutandis, set by Japan and Australia before the starting price of iron ore, CVRD and Asia, Japan, Korea, the price of steel reached an agreement. Subsequently, the world's largest steel plant Arcelor Mittal also accept this price, the European market prices basically established.

Should not be hosted this year's iron ore negotiations in the Chinese steel association insisted that mining enterprises to make 40% -45% decline in the recent easing of the position, but still insist on being a starting price of slightly higher than the rate of decline. However, industry sources said negotiations to this time, in the iron ore benchmark prices in addition to the emergence of a "China price" has been little possibility that China might fight to the concession contract will be replaced by the annual Association for half a year longer.

In response to these new situations, Rio Tinto, BHP Billiton, said it "does not make any comment on iron ore negotiations"; and Steel Association's Office claimed that "Recently no longer accept interviews."

Big Three seek "a new pricing system,"

According to foreign press agency report, the world's major mining companies and steel companies are now planning to establish a new iron ore pricing system, the new pricing system may be an agreement on a quarterly basis to determine the price of iron ore, rather than the current once a year to determine the price, it might would aggravate the volatility of steel prices.

Involved in the drafting of the agreement, according to mining companies and steel companies said the agreement could come as early as the end of this year. As the negotiations are secret, so that all parties reluctant to publicly comment. Once every quarter to determine if iron ore prices may mean that global steel prices will become more volatile. The main product is iron ore, iron and steel. Mining company's profit may fluctuate as the iron ore price adjustment, in particular Brazil's Vale do Rio Doce and Rio Tinto, the two company's main profits come from iron ore sales.

Industry analysis, mining companies and steel companies are caught in this battle for control of iron ore price stalemate. The commodity boom over the past few years, making mining companies hold most of the bargaining power, they continue to raise the price. However, since the global economy into a recession since the end of last year, steel companies have been pressing for lower prices. "Whose Voice Is Whispering is the focus of future negotiations."
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