Steel producers in china ready to haggle
It’s such a long period since 2002 that Chinese steel makers seem to be an underdog in annual iron-ore price negotiation with the mineral’s big three producers: Vale, BHP Billiton, and Rio Tinto. This year the economic crisis will backhand the history. The collapse in steel prices in China points to the first fall in contracted iron ore prices. When China shrinks its steel production and adds to the iron-ore stockpiled at its ports, the big-three producers, therefore, inevitably have to cut their production either.
With Beijing’s stimulus package, Chinese steel industry could help drive a recovery in iron ore demand. Chinese steelmakers rapidly grabbed this chance by squeezing raw material makers to cut prices down in order to make a gap between high iron ore cost and low steel prices narrow. Analysts expect the two sides to agree to a 40% drop in the contract price effectively on Jan 1. Spot prices of iron ore tumbled to a low of about $80/t from midyear highs of $200/t.
No comments:
Post a Comment