China has said it expects to see a modest rise in iron ore prices in the next round of annual term talks, although it has not yet settled on prices for this year.

The China Iron and Steel Group, which sees itself as a policy
coordinator but acts as the country’s top negotiator in the talks, said
iron ore prices were likely to increase in 2010 even though Chinese
steel mills were facing losses.

This is the first time the association has commented on the iron ore
price trend for the next fiscal year, after spending months trying to
resist a 33 percent price cut in iron ore prices this current fiscal
year that was accepted by rivals elsewhere.

CISA’s Vice Chairman Luo Bingsheng declined to comment on whether the
rise would be based on the 33 percent price cut that Australian miner
Rio Tinto offered, or a 35 percent cut that China agreed to with
Fortescue Metals Group.

However, Sam Walsh, head of Rio’s iron ore division, said at a briefing
on Monday that the company was now selling at the “provisional” 33
percent discount and that price would “clearly be the starting point
for negotiations next year.”

Negotiations for 2010/11 prices will begin soon, Luo said, and analysts
are already expecting a 10 percent rise in term prices for the next
April-March fiscal year as steel production picks up.

Hu Kai, analyst with the Umetal consultancy, said a recovery was on the
way, with global pig iron production in September up to 70.8 million
tonnes, only 5.2 percent lower than the record set in May 2008.

“I think demand will be boosted in the next year and support ore prices,” he said.

SPECIAL PRICE

China wants a special deal in annual iron ore price talks as the
world’s biggest consumer of the steel ingredient, adding it does not
have to follow prices set by other countries.

Rio’s Walsh said a separate “China price” was one of the options now
being considered, but Su-Aik Lim, steel analyst with Fitch Ratings in
Beijing, said the preferential treatment of China could cause problems.

“I think definitely gives Chinese steel mills a price advantage, and
will that lead to them flooding the market with cheap steel? I think
implementation is going to be tough.”

In a statement released on Tuesday, CISA expressed its concern about
possible anti-dumping measures, saying the domestic market was already
having to absorb an additional 47 million tonnes of crude steel
following the collapse in exports. It called on the government to
combat foreign protectionism.

WARNING ON LOSSES

CISA, which has been complaining of an imbalance in profitability
between iron ore miners and steel mills, also warned on Tuesday that
domestic mills would suffer a fall in earnings or post losses as their
inventories continue to rise.

It said that domestic crude steel supply would increase by 112 to 117
million tonnes this year, 25 percent of total output, with mills still
overproducing.

This year’s total crude steel output was set to rise 10 percent from last year to around 550 million tonnes, it added.

Furthermore, CISA expects no big change to China’s weak steel product
exports and growing imports for the year, saying oversupply was likely
to worsen despite continuing growth in domestic steel demand in the
fourth quarter and early next year.

Although CISA has continued to emphasise the parlous state of the
Chinese steel sector, its plight has been exaggerated, said Lim of
Fitch Ratings.

He said domestic prices have remained robust even though steel
production has risen 12.4 percent and steel imports 10.9 percent in the
first nine months of the year.

“We are not seeing at this production rate that prices of steel
products are crashing since the adjustment in September,” he said.

“It does imply that China is consuming the steel that it is producing.”

Source: Reuters

Search to find what you want

• Angang Steel hikes steel prices for December

    China Knowledge reported that Angang Steel Co Ltd one of China top three steel producers has raised the prices of its major steel products for December.

• Hebei Steel cuts rebar prices by 19% in September

    Hebei Iron & Steel Group, China’s second-biggest steelmaker, cut prices of reinforcing bars by 19 percent, the first reduction since April, according to Umetal Research Institute.  The Hebei province-based mill cut benchmark prices of the product, used in buildings, by 950 yuan to 3,950 yuan ($578) a metric ton for September

• Peak iron ore prices baffle steel company

    Iron ore spot prices reached a record high this week, triggered by moves from global mining firms to enhance their position in ongoing negotiations, industry insiders said.

• China Wuhan Steel raised steel prices April-paper

    China’s Wuhan Iron and Steel Co has raised April prices for hot- and cold-rolled steel by 300 yuan a tonne, and for galvanised steel by 200 yuan a tonne, the official China Securities Journal said on Tuesday. Wuhan Steel was the first to announce April prices among China’s steel sector,

• S. Korean steelmakers Begin to Raise Steel Prices

    Amid the recent rise in raw material prices, South Korea’s price of steel products including an iron bar is to increase. According to industry insiders on Monday, Hyundai Steel has decided to raise its steel prices centering on long products and apply price increases from on February 2. Consequently, other

• Maanshan Steel Says Chinese prices are at breakeven levels

    Maanshan Iron & Steel Co., the second-biggest Hong Kong listed Chinese steelmaker, said prices in China are trading around breakeven levels. “At present, the steel prices are around the breakeven levels,” Chairman Gu Jian Guo said today in an interview in Beijing. “We’re having a small profit margin.

• Steel demand in China May Rise 12%, lane Ore Prices, CICC Says

    Steel demand in China, the largest metal consumer, may rise 12 percent next year on booming property and auto demand, fueling gains in prices of iron ore, China International Capital Corp.

• CISA see: Domestic steel market, a better performance in 2010

    Luo Bingsheng, the executive vice chairman of the China Iron&Steel Association (CISA), has predicted that the steel market in China will indicate a better performance in 2010. Mr.

• Iron ore price negotiations – CISA sees 10pct hike in 2010

    Metal Biz reported that while analysts forecast a boosted steel demand in 2010, the China Iron & Steel Association also sees a 10% rise in 2010 to 2011 fiscal year’s iron ore contract prices, as steel production will need more iron ore. According to analysis from officials of CISA, China

• Chinese steel mills in rush for Indian iron ore fines

    2010 opened with a big bang for Indian iron ore miners as spot prices for export of Indian iron ore fines surged by 5% to 10% for various grades in a span of few days FOB prices have gained 15% to 26% for various grades in last 22 days since

• JSW Steel hikes prices by 3-5% in all categories

    JSW Steel Ltd, the country’s third-largest steel-maker on Monday said that it has raised product prices by 3-5% across all categories led by an increase in raw material prices and pick-up in demand. “We have raised product prices across all categories by 3-5% starting this month,” JSW Steel, director sales

• China steel price has been 14 weeks

     Steels prices in China had kept climbing by 14 straight weeks till last week, according to statistics from the China Iron and Steel Association. The composite price index of steel products reached 104.88 last week, up 1.12 percent over the previous week. Lange Steel’s survey on 30 steel products showed that

• China s Baosteel in February producer prices increased

    Baoshan Iron & Steel Co (Baosteel), the nation’s largest steel mill, significantly raised its February manufacturer prices, the China Daily reported Thursday. Major steel wire product prices went up 300 yuan (44 U.S.

• Tokyo Steel to raise prices for December Contracts

    Tokyo Steel Manufacturing Co., Japan’s largest maker of construction girders, will increase prices of some products by as much as 4.2 percent because of rising raw material costs. The Tokyo-based company will raise the price of construction products including deformed steel bar, wire rod, and I-beam by 2,000 yen ($22.3)

• Chinas Baosteel in February producer prices increased

    Baoshan Iron & Steel Co (Baosteel), the nation’s largest steel mill, significantly raised its February manufacturer prices, the China Daily reported Thursday.