China leads iron ore price talks
By Jiang Wei (China Daily)Updated: 2007-01-11 09:49
Despite China, the world's biggest iron ore importer, setting the benchmark
price for ore for the first time this year, experts say suppliers still control
the market.
This year's price creep, following four consecutive years of
large rises, implied the leading ore miners have a firm grip on price
setting.
Hundreds of Chinese buyers were forced to accept a 71.5 percent
increase in the iron ore price in 2005, which was first agreed to by a Japanese
mill. That was followed by a further 19 percent increase last
year.
China's largest steelmaker Baosteel settled the iron ore price for 2007 with an increase
of just 9.5 percent.
Luo Bingsheng, executive deputy president of the
China Iron & Steel Association (CISA), said the price reflected market
conditions, and China had made headway in taking the lead in negotiations for
the first time.
According to the rules of the international iron ore
trade, the first price agreed between a major buyer and miners is taken as the
benchmark for the long-term price.
Luo said China, which accounts for
nearly half of the global iron ore trade and contributes 80 percent of demand
growth, should "have a say" in international prices.
"We are satisfied
with Baosteel's performance in the negotiations this year," Luo said.
"The (9.5 percent) increase is acceptable as Chinese steelmakers enjoy good
profits."
As China increased its proportion of long-term contracts in
iron ore imports, the average import price in iron ore declined slightly last
year from 2005, despite the 19 percent increase, according to statistics from
the CISA and the China Chamber of Commerce of Metals, Minerals & Chemicals
Importers & Exporters.
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