the iron ore development as Chinese model
October 17, the Ninth International Symposium on China’s iron and steel raw materials, that ended in Qingdao. At the meeting, Chinese representatives – China Iron and Steel Industry Association, the Secretary-General Shan Shanghua throwing iron ore price negotiations “China model”, with giant iron ore conference announcing release of the “prices 30% -35%” tit for tat sound of the wind, pull opened in 2010 iron ore price negotiations and foreign big screen.
Pricing model: The first mention of the “China model”
In this seminar, the China Iron and Steel Industry Association, the Secretary-General Shan Shanghua a detailed explanation of the “China model”, which takes the form of billing cycle, price-volume interaction, unified national price for their goods.
This is the first time that the negotiation model of clarity. For the more sensitive, but also the substance of the negotiations – the price alone, Shang-Hua said that next year’s iron ore glut certainly a long association the price to be decided by the parties of the supply and demand. This statement means that the Chinese side believes that next year’s iron ore price should continue to fall.
Mining enterprises attitude: Foreign react differently to
China’s negotiating partners – BHP Billiton, CVRD and Rio Tinto representatives also attended the seminar, but they were not public statements. However, on the day before the convening of the seminar, there are things the media said the three mining giants will be asked to 2010-2011 annual iron ore price increase 30% -35%.
For the next year’s iron ore supply-demand situation, the participants indicated that the iron ore business representatives more difficult to predict. But China’s “China model” has been part of the corporate identity, general manager of Australia’s Aquila Resources Ltd., said ore, negotiation model depends on co-operation with various steel mills in negotiations does not necessarily follow the model of the Big Three. FMG Liu Xiaodong, director of sales and marketing, said the next FMG output of 55 million tons of iron ore according to the agreement calls for all of the long association in the form of ore sales.
The Western Australian Government Commercial Representative Office in China Chief Representative ZHUANG Bin-jun said that Australia is iron ore and China’s steel market is the interdependence of upstream and downstream, the future of Western Australia’s iron ore will be increasingly dependent on the Chinese market, with an estimated 7-8 into dependent on the export of iron ore market in China.
Supply and demand analysis: hard to continued price rebound
With the slow recovery of the global economy, steel demand has to pick up, but it is worth attention is the slow rebound in global steel production, the way a strong rebound in China’s steel market has been a serious surplus production capacity, the Government is trying to solve this problem through mergers and acquisitions. Hebei Iron and Steel Group, Sha Steel Group, and many other iron and steel enterprise executives have said that the Chinese steel industry overcapacity will eventually lead to a new round of cuts later in steel mills.
At the seminar, China Steel Trading Co., Ltd., general manager of Feng Shui-jun said that the iron ore supply and demand situation has been rendered loose, at present, this kind of supply and demand situation in 2010, there will be no significant changes.
However, in the spot market, because iron ore companies to reduce supply and other reasons, the iron ore price has been steadily rebounding since September. At present, 63.5% fine ore in India’s offer of 90 dollars / ton, compared with the previous period rose 10%. However, for this round of iron ore price increase, industry sources have said that if steel prices continued to fall in iron ore prices is difficult to continue.
Aspects of China Iron and Steel Industry Association, said that so far, China’s iron ore imports in 2009 than the actual demand exceeds 50 million tons, the demand for next year has laid a discount.
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