Iron ore negotiations ushered in sensitive one stroke

There negotiations expected progress. And before the rumors of different media, the Australian mining giant BHP Billiton announced on the 30th, the company has many customers in Asia reached an agreement, will present the annual iron ore contract prices based on CIF value to more short-term contracts.

    BHP Billiton said that these agreements represent the company's iron ore sales of a large part of this structural reform, consistent with BHP Billiton's goal of achieving market-clearing price. This is a year of negotiations for the first time for the announcement seems to imply, including BHP Billiton's three mines may have to find a breakthrough to implement pricing quarter, running more than 40 years of iron ore a long association model will be broken.

    BHP Billiton in a statement released on, there is foreign reports, Japan's largest steelmakers - Nippon Steel and CVRD in Brazil reached a preliminary agreement for iron ore from April to June to pay 100-110 U.S. dollars per ton. Information by a variety of negotiations, the impact of the current spot price of iron ore along and sing, 30, domestic spot ore price has reached the port 160 U.S. dollars / ton, more than double last year's end.

    As of press time, CVRD and Rio Tinto not to make any final announcement for the negotiations. However, a steel veteran told reporters the negotiations in early April may be a result of recent days would be the most sensitive period.

    China Steel Association Deputy Secretary-General Shan Shang Hua told reporters in a telephone interview, said that China does not agree with the so-called quarterly pricing, pricing model will continue to adhere to a long association. He also said that at present negotiations are still ongoing. It is understood that the present steel than Japan and Korea, the European and Chinese steel mills have long resisted abolition of the Agreement price model.

    In the event negotiations on iron ore, raw materials, an inspector from the Ministry of Industry Jia Yinsong participating in "2010 China Iron Ore Conference" clearance interview that China adhere to long-term price, mutual win-win cooperation model with the miners. He also stressed that the agreement will be priced in three major short-term risk - the risk of iron and steel business, steel industry, industrial risk and credit risk.

    However, there are indications that the three mines on the abolition of a long association model well-thought. Lo, president of Brazil's Vale in the 29th heat Ageneili interview that his attitude: Vale quarterly price adjustment contract for this year, will sign the purchase agreement of iron ore a year from the previous time period to once every quarter in order to better follow the spot market price changes. In the past few years, Ageneili has been a strong advocate of traditional pricing mechanisms.

    Reporter observed, without exception, the three mines are the 2008 financial crisis, China's steel mills did not follow the agreement of the contract, as long this year to change the agreement mechanism, the implementation of the most important reason for quarterly pricing. The early beginning of this year, the three mines are also on that ground, the Chinese steel customers continue to deliberately reduce the supply of traditional long agreement, on the one hand pushed spot prices, on the other hand to the steel mills enormous pressure on steel the three mines to compromise.

    Participants of the large steel mills, a general manager told reporters Trade frankly, Rio Tinto has halted the Chinese steel mills over iron ore, BHP Billiton's ore price index is to be settled, or is the tender spot the form of purchase. "Three cars in the mine ore like the 'BMW' car, the market is very difficult to see, to get to spend a lot of effort." The general manager told reporters, also resulted in short supply of ore to the steel panic in the late stable supply, the company has sent people to rush to Singapore, met with Rio Tinto executives in the hope of convincing extension to start supply, but it is very difficult.

    "At present, Chinese steel mills should not accept." That person said, even though there are some Asian steel mills accept BHP Billiton's short-term contracts, and perhaps a handful of a few, while BHP Billiton of this announcement, it may be used to boost "smoke" psychological pressure to the steel mills and then one by one break, so as to achieve its objective of implementing the pricing index.

    What is worrying is that if the truth in BHP Billiton said the quarterly price to CIF basis, it means that freight will be the impact of each quarter, an important factor in iron ore prices. The three mining companies control 88 billion U.S. dollars global iron ore seaborne trade volume of 2 / 3, they can freely through the control of sea freight to control the price of iron ore, openly and reap excess profits. In addition, mining investment, profits, tariffs, exchange rates, supply factors such laws will be used as a means of pushing up ore prices. After iron ore was in financial technology, the Chinese iron ore market speculation and the speculation is bound to increase, China's steel industry will be more confusion into the dangerous period.