China has set new plan for iron ore negotiations

CISA: It is expected to be agreed in June to strengthen import controls on steel although Rio Tinto has reached an agreement with most of Asia's steelmakers to cut iron ore contract prices by 33% per cent, China is still insisting on its own larger decline. At the sixth session of the Shanghai Derivatives Market Forum yesterday, Bingsheng, the executive vice president of the China Steel Industry Association, reiterated that Chinese steelmakers were still looking for a bigger drop in iron ore prices.　　He also suggested a one-step adjustment to the export tax rate for steel products. Chinese steel mills are still negotiating with iron ore suppliers to return to a 2007-year price level, which means China believes iron ore prices should be 40%~45% lower than last year, Bingsheng said.　　"This price is still the main goal of our negotiations," CISA has drawn up a new negotiation plan, but he did not disclose the details.　　Bingsheng predicted that China's 2009-2010 iron ore price negotiations would end by the end of June. CISA recently issued a statement saying that China's steelmakers could not accept the first agreement between Rio Tinto and Nippon Steel to reduce the price of iron ore by 32.95% (hereinafter called the starting price) of 2009. According to the traditional rules of international iron ore negotiations, any buyer and seller will follow the price agreement between the buyer and the seller.　　However, the pricing mechanism was damaged in 2008. At present, the long association ore below the spot ore price factor has made the spot price straight up in a week, almost Chang lattice.　　China's imports of 63.5%-grade Indian mines have risen to 600 yuan/ton, up 30 yuan/ton from the previous week. Lange Iron and Steel Information Research Center analyst Zhang said to the Morning Post Reporter: "This situation has aggravated the psychology of traders, will soon increase the amount of cash imports, will lead to the Chinese port iron ore spot stagnant stock remains high." On the other hand, if the price of iron ore rises above the spot price, it will push up the domestic steel price and promote the domestic and foreign spreads to continue to expand.　　"It is noteworthy that Bingsheng yesterday also" Shanshi ", warning domestic steel companies and international traders, if the continued import of iron ore arbitrage operation, 2009 China will appear 200 million to 300 million tons of iron ore surplus.　　Observers point to a large accumulation of iron ore, or one of China's most hawkish bets this year on iron ore negotiations.　　June 1, Rio Tinto, Australia, said in a statement, including South Korea's POSCO and Chinese Taiwan Enterprises, China Steel, the Chinese dragon Steel has now accepted the "starting price" decline.　　Only mainland China is still "alone" in the region today. Overcapacity is still serious. A steel mill personage to the morning paper reporter said, in fact, the current iron ore prices, whether it is Chang or spot prices in accordance with the level of the two years is not high, but the most important thing is to consider whether the later steel market can go up the problem, if the steel price downturn, the current price of such mines is certainly unacceptable. Lange Steel believes that steel prices in early June isTo maintain a relatively high level of operation, but in the long run, to support the foundation of steel prices is not strong, the future trend of the market is uncertain. According to CISA's report in mid-May, the crude steel Nissan level reached 1.478 million tonnes, only 1.51 million tonnes lower than the February daily output.　　The industry is expected to maintain 1.47 million-1.48 million tonnes of crude steel daily production in late May, so that this year's crude steel production will reach 539 million tonnes, up from 79 million tonnes at the level of 460 million tonnes set at the beginning.　　Bingsheng said that in the face of severe supply and demand imbalance in the domestic steel market, the state authorities are studying the adjustment of export tax rate, and he also proposed to strengthen the control of imports. However, in the current domestic and foreign steel market environment, in the absence of foreign demand in the market environment, can not be expected to rely on export tax rebate, which can not solve the problem of domestic overcapacity.