May 20 MetalBiz¡ªIt is three months ago when Japan¡¯s steel mills reached agreement on iron ore price with Vale. There is still no result in the negotiation between China and Australia. The price hike in spot market and the higher freights of iron ore enhanced the bargaining power of the miners. Rio Tinto and BHP Billiton demand steel mills in East Asian to offer freight premium. If no agreement is made before July 1, the long-term contracts will end and the iron ore will be transferred into spot market.
China also holds a determined attitude. China Iron and Steel Association (CISA) announced on May 15, appealing all Chinese enterprises to reject the spot iron ore, because Rio Tinto put the surplus of iron ore resources into spot market to make more earnings with the so-called reason that the force majeure decreases the long-ten contract supply. It is said that Chinese steel mills have reached agreement, that is, during the rejection, majors steel mills, such as Baosteel, WISCO, will supply iron ore to those mills who is lack of resources.
Besides, on May 16, Ministry of Commerce of Peoples¡¯ Republic of China, Ministry of Transport, Ministry of Railway and CIAS discussed to take measures to dredge ports, decrease stock in ports to control freight and spot prices, and to ease the negotiation.
It is said that Brazilian Vale will support China to restrict freight. Vale may suspend the export of some main ports to release the shipping capacity. Since May, the shipping cost reaches 100%-120% of the iron ore price.
Australian miners are also very tough. Rio Tinto said, they have rights to decrease the supply volume and to sell iron ore in spot market. And the company will try to raise the iron ore price to reflect the tight supply.
The two miners in Australia boosted the BCI index to 18000 point, hitting new record, up 40 percent in less than a month. And the freight from Brazil to China hits breaks record every day to nearly $110 per ton and the gap with the freight from Australia to China is increasing.
The negotiation will go on and it will be delayed to June. .however, we should pay attention to Japan, who will not abandon the long-term contract and has to accept the demand of the miners.
Sino-Australia iron ore price negotiation upgrades
May 20 MetalBiz¡ªIt is three months ago when Japan¡¯s steel mills reached agreement on iron ore price with Vale. There is still no result in the negotiation between China and Australia. The price hike in spot market and the higher freights of iron ore enhanced the bargaining power of the miners. Rio Tinto and BHP Billiton demand steel mills in East Asian to offer freight premium. If no agreement is made before July 1, the long-term contracts will end and the iron ore will be transferred into spot market.
China also holds a determined attitude. China Iron and Steel Association (CISA) announced on May 15, appealing all Chinese enterprises to reject the spot iron ore, because Rio Tinto put the surplus of iron ore resources into spot market to make more earnings with the so-called reason that the force majeure decreases the long-ten contract supply. It is said that Chinese steel mills have reached agreement, that is, during the rejection, majors steel mills, such as Baosteel, WISCO, will supply iron ore to those mills who is lack of resources.
Besides, on May 16, Ministry of Commerce of Peoples¡¯ Republic of China, Ministry of Transport, Ministry of Railway and CIAS discussed to take measures to dredge ports, decrease stock in ports to control freight and spot prices, and to ease the negotiation.
It is said that Brazilian Vale will support China to restrict freight. Vale may suspend the export of some main ports to release the shipping capacity. Since May, the shipping cost reaches 100%-120% of the iron ore price.
Australian miners are also very tough. Rio Tinto said, they have rights to decrease the supply volume and to sell iron ore in spot market. And the company will try to raise the iron ore price to reflect the tight supply.
The two miners in Australia boosted the BCI index to 18000 point, hitting new record, up 40 percent in less than a month. And the freight from Brazil to China hits breaks record every day to nearly $110 per ton and the gap with the freight from Australia to China is increasing.
The negotiation will go on and it will be delayed to June. .however, we should pay attention to Japan, who will not abandon the long-term contract and has to accept the demand of the miners.
http://www.metalbiz.com.cn/english/ ■