China steel mills, global ore miners in deadlock
The stand-off between China’s steel mills and the world’s major iron ore miners continues after the June 30 deadline to agree on ore prices for the next 12 months.
But who will blink first in the ongoing guessing game over how the global economic slowdown will affect the future of supply and demand? The side with the best view of future prices will win the negotiations, say analysts.
Both the China Iron and Steel Association, which heads the talks on behalf of major Chinese steel mills, and ore producer Rio Tinto are refusing to comment on the progress, except to say talks are continuing.
The three iron ore giants — Vale of Brazil, Rio Tinto and BHP Billiton — have settled the 2009-2010 iron ore price contracts with major steel makers elsewhere in Asia and Europe, agreeing on price cuts ranging from 28 to 33 percent. This would equal to US$75-US$80 per ton, including freight costs.
Once Rio Tinto settles the 2009-2010 contract prices with the CISA, Vale and BHP Billiton will follow or set their own prices after further talks, says Wang Guoqing, a Beijing-based analyst with Lange Information Consultation Co.
Rio Tinto is sticking to its offer of a 33 percent price cut for 2009-2010 contracts, while the CISA insists on a deeper cut.
“We have agreed on price settlements in a number of major markets this year, but not in China,” said Rio Tinto spokesman Gervase Greene in an email to Xinhua news agency on Tuesday. “We are officially in discussions still, and will not speculate on how our discussions are faring, or why.”
However, the CISA believes the 33 percent price cut “failed to reflect the real supply and demand situation on the international market and would lead to overall losses for Chinese steel companies.”
Tags: CISA, iron-ore, iron-steel, output, steel, steel-maker