BIZCHINA / Top Biz News
Steelmakers to reject 19% iron ore hike
By Jiang Wei (China Daily)
Updated: 2006-05-18 06:53
Chinese steelmakers are not likely to accept the 19 per cent increase in
iron ore prices agreed to by Germany's ThyssenKrupp AG, according to the
China Iron and Steel Association.
The price accepted by the German company would not be taken as the global
benchmark as European mills are represented by Arcelor SA in negotiations
for long-term prices, while Chinese steelmakers are represented by
Shanghai-based Baosteel Group, said Qi Xiangdong, deputy
secretary-general of the association.
But he admitted that the agreement would have some impact on Baosteel's
negotiations.
The elements of the Asian market, in particular the specific conditions
of the Chinese market, must be taken into consideration in setting iron
ore pricing, the association said yesterday on its website.
"Otherwise, Chinese steel companies will not accept the prices," it
insisted.
The 19 per cent was above what Chinese buyers could afford, said an
unnamed insider.
"Even if an increase is inevitable, China will strive to make a good
deal," he said.
ThyssenKrupp reached an agreement on Monday with Brazil's Cia Vale do Rio
Doce, the largest iron ore miner in the world, accepting a 19 per cent
rise on iron ore prices in 2006. It is the first agreement this year
between a major steelmaker and a producer.
Baosteel, Arcelor SA and Nippon Steel Corp, which represents Japanese
iron ore importers, are still in talks with the world's top iron ore
miners Vale and Anglo-Australian groups Rio Tinto Ltd and BHP Billiton
Ltd. The talks have been prolonged by over a month compared to past
agreements.
Local media said Nippon Steel Corp could only accept limited material
price rises this year. The company led a 75-per cent increase in the
long-term contract last year.
Vale pressed buyers to accept a 24.6 per cent increase. China Iron and
Steel Association refused to accept the figure, saying it was "not
rational."
According to Sydney-based Global Mining Research statistics, every 1 per
cent increase in iron ore prices will add US$29.6 million to Rio's profit
and US$21.4 million to BHP Billiton's profit.
China's demand for iron ore increased by 75.9 million tons and 121.8
million tons in 2004 and 2005 respectively.
In a bid to meet domestic demand, China is diversifying sources of iron
ore.
China's output of iron ore is expected to increase by 77 million tons
this year.
Associations of Chinese importers are looking at long-term co-operation
with Indian miners, who used to focus on the short-term cash market.
The country also plans to shut down small mills with an annual production
capacity lower than 200 cubic metres. The move is expected to reduce
China's demand for iron ore by 60 million tons.
(China Daily 05/18/2006 page9)
(For more biz stories, please visit Industry Updates)
Most Popular Stories in 48 Hours
� Cities may alleviate housing woes
� Rural labor shortage beginning to be felt
� Xie Qihua: Made of Steel
� ICBC to open subsidiary in Moscow
� Good news in desertification control
Today's Top News
� Russia, China close ranks in Central Asia
� China emerging from shadows of AIDS
� Court hears last appeal for fugitive Lai
� Taiwan's 'security report' hurts peace
� Yangtze river 'cancerous' with pollution
Top Biz News
� Carrefour keeps pace with expansion
� In real-estate market, small now beautiful
� New moves to steer car sector stability
� Water consumption for per unit of GDP to drop 30%
� China, Japan start forum on energy saving cooperation
Alibaba is the largest B2B marketplace in the world. Source model ship,
wooden puzzle, one-piece toilet, RC hovercraft, photo album, prom dress,
pocket bike, Vaginal Speculum, Samurai Sword, String Panty and PVC Pipe.
Learn Chinese online
No comments:
Post a Comment