China taking new strategies in iron ore negotiation


MetalBiz-- “I think the three major iron ore suppliers will not delay again, because we will negotiate with suppliers, moreover, those who first reach an agreement with China side will receive the largest purchase quantity.” one Chinese authority imparted on Mar.16 when speaking of the negotiating strategies that China will take next step.

It was known to us the global steel production and demand for iron slumped this year, although China’s demand would decline, the demand was still high, and the three major suppliers reduced output at different levels, so China would negotiate with the three major suppliers with the principle of first come and first served, according to him.

It is learned that in the Imported Iron Ore Working Committee held in Tangshan in January, China Iron & Steel Association (CISA) done a demand statistics to domestic most steelmills this year, which also covered the traders at the same time.

Analysts pointed out that it may be the preparation for asking for price. “In this condition, suppliers should positively response, and it is necessary to consider making concessions first or after.” the above-mentioned person said.

Zhang Xiaogang, Ansteel’ general manager expressed during an interview that the iron ore giants such as Companhia Vale do Rio Doce (CVRD) and Rio Tinto could reduce the price by 40-50pc.

"When steel prices decline, prices of raw materials are bound to decrease, and the Indian spot prices reduction is the evidence", he said.

In addition, after suffering a rebound, domestic iron ore spot market and sea freight began a new round plunge since last February.

IanChristmas, the secretary-general of World Steel Association (WSA) also said: "Prices of steel products have dropped 50pc, so that of iron ore should slip 50pc.”

Owing to the downturn of iron and steel market, Rio Tinto and BHP Billiton are still waiting for the market restoration so as to the substantial price negotiation, while Brazil Vale said clearly that they would not set the price and would hold watch-and-see attitude towards the two Australian companies’ negotiation result. … For further info visit
Reuters reports that China is expanding its program of eliminating the middleman with direct investments in strategic materials. Its latest and largest acquisition is stakes of up to 50% in nine mining assets of dual-listed (London and Melbourne) Rio Tinto. Total Chinese investment is $19.5 billion, including “$7.2 billion of bonds convertible into shares of the world’s largest aluminum maker, second-largest iron ore miner and a top-five copper producer.”

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