Chinese mills start iron ore talks with miners

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Chinese mills start iron ore talks with miners - report

(Agencies)
Updated: 2010-02-03 12:06

皇冠体育app's leading steel mills have begun talks in Singapore with the big three global miners on 2010 contract iron ore prices, the 皇冠体育app Times newspaper said in a report, but the Australian miners declined to comment.

The paper said delegations from Baosteel, Wuhan Iron and Steel and others were already in the city to hold discussions with BHP Billiton and Rio Tinto of Australia and Brazil's Vale. Baosteel, Rio Tinto and BHP Billition all refused to comment on the report when contacted by Reuters on Tuesday.

A spokesman for the 皇冠体育app Iron and Steel Association (CISA) was not immediately available for comment, and it remains unclear if the association will play a direct role in the talks this year.

The association was heavily criticised for its inflexible negotiating tactics in 2009, when its effort to strongarm the miners into offering a lower "皇冠体育app price" ended in failure, with Chinese steel firms eventually forced to accept the "interim" benchmark price agreed by Rio Tinto with Japanese mills. However, Ministry of Industry and Information Technology spokesman Zhu Hongren said last week the government continued to back "united" iron ore talks led by CISA and the 皇冠体育app Chamber of Commerce for Metals, Minerals and Chemical Importers and Exporters.

But Zhu also said iron ore prices were a commercial matter and Baosteel would represent the industry during the talks.

A Chinese analyst who did not want to be named said Baosteel and the other big mills were under commercial pressure to sign an agreement as quickly as possible but under political pressure to hold out for a better deal.

"Spot market iron ore prices have been rising and settling early is a good idea -- but the mills don't want to be seen to agree too quickly," he said.

Spot iron ore prices in 皇冠体育app are at $120.50 a ton, according to the Steel Index, down from a peak of $131.20 last month but double the lows in March last year.

CISA has refused to comment on negotiations this year, but last week the association posted a report on its official website dismissing speculation that the big miners had frozen out Chinese mills this year, preferring instead to deal with their customers in Japan and South Korea.