Wednesday, February 18, 2009
China Won't Accept Different Iron Ore Prices This Year-Assoc
Wednesday, 18 February 2009
China won't accept different prices for Brazilian and Australian iron ore as it did last year based on freight rates, a top China Iron & Steel Association official said Tuesday. Chinese steel mills want to go back to a single benchmark price as was the case in previous years, CISA Secretary-General Shan Shanghua said in a telephone interview.
Last year, Australian and Brazilian miners broke the tradition of a single benchmark price and successfully negotiated different prices based on shipping costs.
A media report last week had suggested Chinese negotiators might accept different rates this year too, but Shan ruled out any such plan.
The Association may also revisit an earlier attempt to prod its members to stick to a uniform pricing policy while selling iron ore imported under long-term contracts in the spot market, Shan said.
Mills had failed to ink a proposed agreement to this effect last month and Shan said he could not confirm if it would be a success this time.
Shan's comments come ahead of the association's annual meeting Wednesday and Thursday.
Under the planned agreement, steel mills that want to sell excess iron ore in the spot market can charge only a service fee of 3%-5%. The measure was aimed at keeping spot prices under check, particularly at a time when China is in the midst of price negotiations for the 2009-10 contract year.
The $19.5 billion deal between Aluminum Corp. of China and Rio Tinto Plc (RTP) announced last week strengthens China's hand in breaking a "duopoly" in Australian iron ore mining, Shan said.
"Over the longer term, it's possible Chinalco-Rio could break the duopoly," he said. But it is too early to tell if the deal would have any effect in the short term, Shan said.
Source: Dow Jones
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