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Benchmark iron ore prices rose, steel industry cost pressure increased sharply
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Benchmark iron ore prices rose, steel industry cost pressure increased sharply

Classification:
News
Author:
Source:
2010/05/29 14:15
[Abstract]:
China iron and steel association marketing director Chen xianwen confirmed to reporters: 18, 20 Beijing time, Brazil's vale announced with Nippon steel, posco reached a benchmark iron ore price agreement. On the basis of the price in the previous fiscal year, the price of south tiejing rose by 65% and that of calagas rose by 71%.

China iron and steel association marketing director Chen xianwen confirmed to reporters: 18, 20 Beijing time, Brazil's vale announced with Nippon steel, posco reached a benchmark iron ore price agreement. On the basis of the price in the previous fiscal year, the price of south tiejing rose by 65% and that of calagas rose by 71%. This will undoubtedly further increase the cost of Chinese steel enterprises.

 

According to the China iron and steel association estimates, China's iron ore imports in 2008 increased by 40 million tons. That means imports will total more than 400 million tons this year, according to zhang jingang, deputy secretary-general of the China iron and steel association. A 65% increase in the benchmark iron ore price would add more than $10 billion to the cost of Chinese steelmakers in fiscal 2008.

 

Due to the sharp rise in iron ore prices, the average cost of making pig iron in China's large and medium-sized iron and steel enterprises increased by more than 30% in December 2007 compared with the same period in 2006.

 

 

Negotiations for the new fiscal year began in November 2007. The negotiations remain three-on-three: Rio tinto of Australia, BHP billiton of Australia, vale of Brazil against China's baosteel, Nippon steel of Japan and European steel mills.

 

As in previous years, the price is still the main contradiction in this year's negotiations.

 

It is understood that this year's three iron ore supply giants from the beginning of the price increase of more than 50 percent, but the Chinese view is far from the gap.

 

In late January, vale began negotiations with Nippon steel of Japan and posco of South Korea after failing to reach an agreement with China. Finally reached the 2008 fiscal year price agreement.

 

In accordance with negotiation practice, the price set by the negotiating parties who take the lead in setting the price will then be accepted by the suppliers and suppliers involved in the negotiation. International iron ore benchmark prices rose 71 per cent between 2005 and 2007. 5 percent, 19 percent and 9 percent. 5%. Iron ore negotiations in the last fiscal year, baosteel took the lead with vale set a price increase of 9. Price of 5%, thus setting the international price benchmark for the year.

 

Unlike previous years, this year's iron ore negotiations also involved a conflict between long-term contracts and spot contracts.

 

Australia's Rio tinto, one of the big three suppliers, is pushing hard to increase its spot inventories in the new fiscal year. During the negotiations, Rio tinto notified the Chinese company in writing that it would reduce the contract supply by 10 per cent due to force majeure. But while reducing the supply of contracts, Rio tinto announced plans to sell 15m tonnes of iron ore on the spot market.

 

It is reported, the iron ore supply on the market is divided into spot contract and long-term agreement contract two kinds, in December 2007, China landed spot price is close to 200 dollars per ton, and long-term agreement contract price fob 50 dollars per ton or so, when the highest sea freight is only 90 dollars per ton. In fact, iron ore is exclusive and it is in the interest of both supply and demand to establish a stable long-term relationship. In the past, the three iron ore majors have all made promises to the China iron and steel association to establish a long-term stable relationship between supply and demand.

 

In a departure from Rio, BHP billiton, the world's largest resources company, signed a 10-year contract to supply 94m tonnes of iron ore to baosteel during the talks. It is the latest extension of baosteel's existing long-term iron ore contract with BHP billiton and adds 4m tonnes a year to the previous 6m tonnes. BHP will supply baosteel with 10m tonnes of iron ore a year for the next 10 years at a mutually agreed price.