Comments: Why Japan Can Easily Face The Iron Ore Negotiations? - Iron Ore Negotiations, Price -

Attitude has been a strong show's China Steel Association

, the attitude of the recent negotiations for iron ore began to turn. It is reported that China Steel Association has acknowledged a shortage of domestic iron ore situation; and medium-sized steel enterprises and other private and Rio Tinto iron ore companies on "temporary price" expressed understanding and recognition, which means that a unified iron ore talks actually coming to an end.

Tacit agreement with the current in the primary and secondary steel steel sign the agreement with the practice of private enterprises, the association had been lost due to the negotiation of 38 small and medium sized steel enterprises critical juncture in the negotiations "collective defection" to the international giants to bring breathing space machine. However, this analysis does not hit the mark mechanism. Currently, CVRD and Japanese and Korean steel enterprises have been established in April to July the price of iron ore, or nearly doubled. This shows that even small and medium sized steel enterprises is not a "betrayal", the Steel Association's "China price" can not be fulfilled as long as the demand side of iron ore to make a concession, China insisted on not make the trip.

The fact that changes in iron ore negotiations, parties can not lead to fundamentally reverse the weakness of China's negotiations. Baosteel, whether before, or today's China Steel Association, although the style of the compromise negotiations to be strong, but the final results are steel enterprises have to face the rising price of iron ore each year. Even more do not choose the easy way out is a hard line, so that the international iron ore giants took the opportunity to succeed, the final abolition of running up prices more than 40 years of long association, and shift to the spot price of the quarter based on contract, the profit margins of Chinese steel enterprises were further compression. It is worth mentioning that China's iron ore negotiations with the difficulties encountered by different each year, Japan and South Korea Steel Enterprises are to accept whatever the price of iron ore surged. Why Japan and South Korea worry about iron ore prices of iron and steel enterprises will not eat the profit? In this regard, we may look at why Japan can "calm" in the face of iron ore negotiations.

In fact, the magic weapon in Japan is that it can be pressure to transfer out of iron ore price rise, rather than your own. On the one hand, the Japanese steel prices abroad have interests in many mines, which compared to China, Japanese companies in the mining easier to strike a balance between price and earnings. On the other hand, the Japanese iron and steel products have advantages in the international market demand has a certain rigidity. For example, the special steel as a high value-added products, China's output share of only 8%? 10%. This ratio in Japan up to 25%, while production costs to upgrade, the Japanese steel enterprises is very easy to pass on most of the cost of the downstream countries. In addition, iron ore transportation in Japan, as far as possible with local companies. For example, the country's steel giant Nippon Steel on the MOL only 32 tons of iron ore company dedicated vessels, such practices effectively avoid the manipulation of shipping iron ore giant to bring the price of raw materials price fluctuations. In contrast, only 30 of China's iron ore carriers, the capacity is insufficient to play a role in stabilizing the price of iron ore shipping.

Can see, only actively widen the sources of iron ore, an early end to the domestic steel enterprises extensive management pattern, it could fundamentally enhance the dominance of iron ore negotiations. On the one hand, around the iron ore itself, iron and steel enterprises should be fully encouraged to "go out", select the desired country and mining investment and exploration, thereby reducing the friction with the iron ore giants interests. In addition to its own iron ore market, the other relevant departments should earnestly put money and manpower to support iron and steel enterprises to enhance their skills in the effective use of domestic mining resources, enhance the value-added products. This is necessary to mention that the interests of domestic steel companies also need to change the situation of inequality. Industry that the China Steel Association is the representative of the interests of large steel mills, small and medium enterprises can not enjoy the fair treatment of steel. As a result, domestic steel prices tend to disunity at the negotiating table, not together. Chinese iron ore negotiations

not out of the shadows long, has a good impact on macroeconomic trends. The key to change this predicament, but also the competitiveness of the domestic steel industry itself started. Otherwise, separated from the surface of countermeasures may result runs counter to the very end.

by: gaga

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