Chinese steelmakers in Brazil to negotiate 2008 iron ore prices

24 August 2007

Sao Paulo, Brazil, 24 Aug – delegation of iron and steel industrialists from China, the world’s largest consumer of iron ore, has begun negotiations in Brazil on prices for the raw material in 2008, with the threat of insufficient supply on the world iron market pressuring prices upwards.

The Chinese delegation, which will also visit Argentina and Australia, the largest supplier countries, is thus trying to take the initiative in the negotiations and set the iron ore price as soon as possible, before the price rises, Chinese financial newspaper the Economic Observer reported Thursday.

The delegation, which includes representatives from 16 state companies and three private companies, plans to make contacts in Brazil with companies and associations involved in mining iron ore and discuss commercial issues with those responsible for this area in government departments.

As in previous years, the negotiation process is likely to go through a stage of statistical disputes of predicted demand between the Chinese and Companhia Vale do Rio Doce (CVRD), the world’s largest producer of iron ore and China’s main supplier.

China plans to gain the contractual upper-hand in setting iron ore prices on the global market as the world’s largest producers – Brazil, Australia and India – have been able to impose increasingly higher prices due to high levels of demand in China.

Since 2004 the international price of iron ore has been rising, with the accumulated rise standing at 165 percent.

In the first half of the year, production in Chinese steelworks reached 230 million tons, half of the world total according to official figures.

China became the world’s largest exporter in the sector in 2006, with exports in 2007 estimated at 57.3 million tons, if foreign sales continue their current rate of growth, the Chinese authorities said recently.

China has over 6,600 steelmakers, but the production of just the top four (Baosteel, Wuhan Iron and Steel, Angang Steel and Shoughang) accounts for 18.5 percent of total production in the country. (macauhub)