HomeBase MetalsIron ore price negotiations have started

Iron ore price negotiations have started

The Capitol steel
mill in Beijing
Beijing, China — MININGREVIEW.COM — 04 February 2010 – China’s leading steel mills have begun talks in Singapore with the big three global miners on contract iron ore prices for 2010.     

Confirming this here, the China Times reports that delegations from Baosteel, Wuhan Iron and Steel and others were already in the city to hold discussions with BHP Billiton and Rio Tinto of Australia and Brazil’s Vale.

Baosteel refused to comment on the report when contacted by Reuters, and a spokesman for the China Iron and Steel Association (CISA) was not immediately available for comment, so it remains unclear if the association will play a direct role in the talks this year.

The association was heavily criticised for its inflexible negotiating tactics in 2009, when its attempt to strong-arm the miners into offering a lower ‘China price’ ended in failure, with Chinese steel firms eventually forced to accept the interim benchmark price agreed by Rio Tinto with Japanese mills.

A Chinese analyst who did not want to be named said Baosteel and the other big mills were under commercial pressure to sign an agreement as quickly as possible, but under political pressure to hold out for a better deal.

CISA has refused to comment on negotiations this year, but last week it posted a report on its official website dismissing speculation that the big miners had frozen out Chinese mills this year, preferring instead to deal with their customers in Japan and South Korea.

Baosteel and Rio Tinto have both appointed new chief negotiators for 2010, as they look to repair the damage done not only by last year’s price talks, but also by the arrest of four Rio Tinto staff members in Shanghai on charges of industrial espionage.

CISA said at the end of last year that it expected the miners to demand a 20 to 30% price increase for 2010.