China is at it again. This year also China has decided to take a hardline as far as iron ore price negotiations are concerned. Even before the Beijing starts its 2010 iron ore annual contract price negotiations in April with the big three global iron ore-mining giants,

the country has decided to take a hardline in the bargaining.

China’s aggressive steel industry trade body, China Iron & Steel
Association (CISA), has already fired the first volley by saying that
global mining giants are seeking a price increase for the 2010 iron ore
annual contract of 20-30 per cent, which brings the talks expected to
start in April, to a large degree of difficulty.

CISA vice-chairman Luo Bingsheng, in an interview with the China
Securities Journal, said the proposed price increase would once again
complicate negotiations with the Anglo Australian mining giants BHP
Billiton and Rio Tinto and Brazil’s Vale.

China’s leading steel maker Baosteel has once again come back to head
the negotiations this year after CISA, which was the lead negotiator
for Chinese steel mills in the failed talks to fix long term iron ore
prices with global miners for 2009.

Analysts say that for 2010, a rise of 10-20 per cent on the benchmark
prices is widely expected, which is on line with the prices set by Rio
Tinto with Japanese and Korean mills this year.

China will be on the backfoot in demanding a higher price cut this year
as its steel production is expected to be a record 565 million tones
due to massive infrastructure building from the 4 trillion yuan pumped
into its economy this year and its steel industry is expecting a higher
demand in 2010 to fuel its booming automobile and construction sector.

To make matters worse for China, India, the world’s third-largest
exporter, which supplies nearly a fifth of China’s iron ore imports,
increased export duty on iron ore lumps from the earlier 5 per cent to
10 per cent and imposed a 5 per cent export tax on iron ore fines.

India is now expected to export nearly 4.5 per cent below an earlier forecast after the present duty hike.

With the Steel Index’s iron ore benchmark price soaring to a high of
$112.10 a tonne this week and Indian iron ore fines being sold to China
at a record $119-121 a tonne this week, China’s say in the price
negotiations with global miners have further weakened.

Source: Commodity Online

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