12-day countdown to iron ore negotiations: will there be a straw that overwhelms the camel?

Iron ore negotiations into the last more than 10 days countdown, Shanxi Iron and Steel Industry Association has confirmed that the provincial steel enterprises are brewing to jointly go overseas procurement, once again let the Chinese negotiators into an embarrassing situation. Although CISA is still tough, stick to the bottom line of the 40% price reduction, but many steel companies have reached the limit of endurance, the spread of small and medium-sized steel Enterprises "Shami" news, and some of the steel enterprises have no alternative to the large number of imports from the spot market, bringing the spot price rise,　　All of this further weakened CISA's bargaining chip at the negotiating table.　　This way, after the Ministry of Commerce said that the two cases will be applied to China's anti-monopoly law, the Ministry of Industry has also expressed its views on this issue, will fully safeguard the interests of China's steel enterprises, while the steel CISA as the only representative of China's iron ore prices to carry out negotiations, to the small and medium-sized steel Enterprises " At the end of the negotiations, the soft rib of China's steel industry ——— the different interests of steel companies of various sizes to the cost of iron ore, and the differences between steelmakers and traders are exposed more fully.　　The highly fragmented industrial landscape has made China suffer the same dilemma in its annual iron ore negotiations.　　Industry dispersed into negotiations the biggest weakness can be said that China's steel industry is highly dispersed behind the different interests of the demand, is the biggest weakness in the negotiations. Previously, media said, 35 small and medium-sized steel companies and Vale reached a long association agreement, purchase volume of about 50 million tons. Such a huge order gives Vale full confidence that the iron ore negotiations this year are "in no hurry". Although CISA Secretary General Mr Shan accepted this reporter's interview clearly pointed out that the Chinese side will insist on 40% of the bottom line never compromise, small and medium-sized steel companies have no qualifications and no authority to sign a long association with Vale agreement, even if it is a waste paper.　　However, the contradictions between the small and medium-sized steel enterprises and the large steel enterprises and the conflict of interests have become a fact that cannot be concealed. When CISA proposed to crack down on the illegal profiteering iron ore, the Shanxi Steel Association also spread the news of brewing overseas procurement. Shanxi Iron and Steel Industry association Secretary-General Shing confirmed that the province is brewing steel companies to overseas procurement, for the hungry steel enterprises to find food.　　Statistics show that in recent years, Shanxi Steel Enterprises in the annual overseas procurement volume of about 30 million tons, relative to China's annual total imports of about 400 million tons, the total amount of procurement in the provinces among the top. Steel industry senior Experts Xu Xiangchun analysis that the small and medium-sized steel enterprises (local steel enterprises) of these measures, although not directly affect the iron ore negotiations this year, but undoubtedly to the three mines backing increased confidence. "This creates an illusion that the Chinese steel industry is booming and cannot be separated from imported iron ore", so mines also have the capital to refuse to slash prices. CISA has repeatedly said that as long as China's large and small steel companies unite to act together, the big three will also be tough to the Chinese market bow. But for CISA's "holding a regiment together," the steel companies outside the association, and even the small and medium-sized enterprises within the steel association are not very active. The reason behind this, in the words of the industry, is that in previous years, small and medium-sized steel enterprises to support the big steel and iron ore giants to reach a long agreement, but the big steel companies in the deal with the big bully smallTo exploit the interests of small and medium steel enterprises in disguise.　　This contradiction does not solve, want to concentric also difficult. Joint solidarity with the Ministry of the Department and the Anti-Monopoly Association CISA is not a man fighting. Mr Shan's tough stance, behind the Ministry of Development and the NDRC's strong support.　　Minister Li Yizhong has repeatedly stated that China's iron ore pricing negotiations in the lesson too deep, can not eat two times. 16th, held in Anshan City, Liaoning Province, the national steel industry information and industrialization of the typical experience of the symposium, the Ministry of Raw Materials division Yanhai told on the two joint venture issued six points of view, said the two Billiton joint with a clear monopoly color, may damage the interests of Chinese steel enterprises, should be in line with the " Yanhai told revealed that the government has no objection to seeking new policies and regulatory measures to raise the right of speech in international iron ore pricing. At the same time, we should vigorously cultivate the competitiveness of domestic mines to avoid long-term dependence on imports.　　And again, continue to support CISA as China's steel industry's only representative on the price of iron ore negotiations.　　Yanhai told this statement, once again flashed the government Department of Cards, which is the main reason for Mr Shan attitude to refuse.　　At the same time, China's Ministry of Commerce's antitrust director Shang Ming also for the first time on the two extension case, said that if a country's antitrust department dismissed a merger, but the transaction also advance, the merger is tantamount to violating the law of the country where the antitrust authorities, mergers and acquisitions should comply with China's anti-monopoly law However, iron ore giants are still exerting pressure, and the head of Rio Tinto's iron ore department is "reminding" Chinese buyers that if the long-term agreement is not negotiated, the shift to a spot supply would be wolf to attract complex financial speculation such as futures derivatives. "It is the market supply and demand that determines the price. If there is a completely independent third party intervention ——— speculators, investors, banks and so on, carry on the investment of iron ore, and increase the volatility of iron ore spot market, the fate of steel enterprises is not necessarily in their own hands. Sham Vosh, Rio Tinto Iron ore executive, said the price of iron ore was not Beijing or Shanghai, but Wall Street and London. "High prices will spur China to develop low-grade minerals, China is the world's largest importer of iron ore." Last year imports 440 million tons of iron ore, accounting for the world's iron ore trade volume of about 50%. Therefore, Yanhai told stressed, "to cultivate the competitiveness of domestic mines." Combined with the characteristics of China's resources, the mining conditions are good, but the ore dressing difficult, such as Siderite, limonite, fine grained hematite, increase exploration and development and scientific research efforts, science and utilization. At the same time, the huge amount of taste in the 15% of ultra-low-grade mines in the scientific exploitation of the agenda, so as to avoid long-term dependence on imports. Wang Anjian, director of the Global Center for Mineral Resources Strategy research at the China Geological Academy of Sciences, said the price of "guaranteeing the long-term benefits of both supply and demand" should be "CIF $55 per ton". International iron ore prices are too high, prompting China to develop a large number of domestic low-grade iron ore, not conducive to both supply and demand long-term interests. According to Wang Jianhan, under the influence of international iron ore prices, China's iron ore capacity building accelerated, a large number of the past did notThe resources with economic exploitation value enter the mining stage.　　Wang Anjian predicts that if iron ore stays high, China will produce more than 500 million tonnes of iron ore by 2012.　　Wang Anjian estimates that if international iron ore prices are priced at 50 US dollars/ton, China's iron ore imports will increase for a long time and lower-grade iron ores will be exploited, but if the CIF price rises to $70/ton, China's lower-grade iron ore capacity will be further released and iron ore imports will decline.　　In the report Chinalco is still hesitating: is Rio Tinto offering or not participating? Rio Tinto formally disclosed the rights issue plan, the allocation of 21 shares per 40 shares allotment.　　UK-listed companies are offering $14 a share for $11.8 billion trillion, and Australian-listed companies are offering $28.29 per share, raising about $3.4 billion trillion. June 15 is the deadline for existing shareholders to register their rights, while Chinalco confirms that it has completed the registration of Rights rights. But Xiong, general manager of Chinalco, said there was no final decision on whether to participate in the rights issue. And Chinalco is required to decide before July 1, after July 2, the new placement of shares officially listed in circulation.　　After June 16, if the original shareholders of Rio Tinto do not subscribe for new placements, the shares can be traded on the market and sold to other shareholders. If Chinalco does not participate in the allotment, it means that Chinalco's 9.3% stake in Rio Tinto will be diluted and the existing single largest shareholder position may falter. The large discount made by Rio Tinto's allotment makes the plan look very "tempting". According to the proposal, Rio Tinto British companies after each allotment rights, the theoretical price of 22.6 pounds, Australian companies after each share rights of the theoretical price of 53.6 AUD, the subscription price and the right to the theoretical price after the reduction of 38% and 47% respectively, the previous trading day (June 4, 2009) compared to the closing price, respectively, a low 48%　　and 57%.　　As of yesterday, Rio Tinto's UK close was around 30 pounds, with Rio's Australia closing at around $73, doubling its selling price.　　Pressure 35 small and medium-sized Steel enterprises and Vale reached a long association agreement, purchase volume of about 50 million tons.　　Shanxi Steel Association is brewing in the province of Steel enterprises to purchase overseas, for the hungry steel enterprises to find food, in recent years, Shanxi Steel enterprises overseas procurement volume of about 30 million tons, in the provinces among the top.　　Rio Tinto "reminded" Chinese buyers that if the long-term agreement price is not negotiated, the shift to a spot supply will likely wolf, attracting complex financial speculation such as futures derivatives.　　Li Yizhong, Minister of the Ministry of Commerce, has repeatedly stated that China's iron ore pricing negotiations in the lesson too deep, can not eat two times loss.　　Ministry of Raw Materials, director of the Yanhai told on the two joint venture issued six points of view, said that the joint should be consistent with the "People's Republic of China Antimonopoly Law", and again, continue to support CISA as the sole representative of China's steel industry in the negotiations on iron ore prices. Shang Ming, director of the China Ministry of Commerce's Antitrust bureau, said that if a country's antitrust authorities dismissed a merger, but the deal went ahead, the merger amounted to a violation of the antiThe law of the State where the monopoly institution is located, the merger and acquisition of the two branches shall comply with China's anti-monopoly law.