China: Vale and Chinese steel makers negotiate readjustment of iron ore prices

4 November 2008

Beijing, China, 4 Nov – Chinese steel makers and Vale are still negotiating the iron ore price rise requested in the middle of the year by the Brazilian mining giant, the chairman of Chinese group Baosteel, Xu Lejiang, said Monday in Beijing.

Vale requested a review of iron ore supply contracts in order to bring prices charged in Ásia into line with those paid by its customers in Europe.

But the Chinese companies were not very receptive to Vale’s request, at a time when freight charges and demand for ore are falling.

Noting that in 2009 there had to be a price reduction, in an amount which he did not specify, Xu, speaking at the China Steel Conference, said that Chinese demand for steel had fallen in the last few months, as a result of reduced domestic demand and a fall in exports.

He also noted that steel production in China was expected to fall to 480 million tonnes this year and forecast that the sector would begin a process of concentration, with the bigger companies acquiring smaller ones.

Baosteel itself hopes to increase its production capacity from 28 million tonnes in 2007 to 80 million tonnes in 2012, most of which is likely to come from acquisitions of smaller companies. (macauhub)