Top Biz News

Chinese mills start iron ore talks with miners - report

Updated: 2010-02-03 12:06
Large Medium Small

China's leading steel mills have begun talks in Singapore with the big three global miners on 2010 contract iron ore prices, the China Times newspaper said in a report, but the Australian miners declined to comment.

The paper said 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, Rio Tinto and BHP Billition all refused to comment on the report when contacted by Reuters on Tuesday.

A spokesman for the China Iron and Steel Association (CISA) was not immediately available for comment, and 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 effort to strongarm 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. However, Ministry of Industry and Information Technology spokesman Zhu Hongren said last week the government continued to back "united" iron ore talks led by CISA and the China Chamber of Commerce for Metals, Minerals and Chemical Importers and Exporters.

But Zhu also said iron ore prices were a commercial matter and Baosteel would represent the industry during the talks.

Related readings:
Chinese mills start iron ore talks with miners - report Steel mills feel the heat in ore talks as output peaks
Chinese mills start iron ore talks with miners - report Baosteel names new iron ore negotiator
Chinese mills start iron ore talks with miners - report Iron ore port stocks hit 3-month high
Chinese mills start iron ore talks with miners - report CISA for unified stand against Rio-BHP alliance

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.

"Spot market iron ore prices have been rising and settling early is a good idea -- but the mills don't want to be seen to agree too quickly," he said.

Spot iron ore prices in China are at $120.50 a ton, according to the Steel Index, down from a peak of $131.20 last month but double the lows in March last year.

CISA has refused to comment on negotiations this year, but last week the association 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.