Iron Ore: The System Began To Shake The Base Price
Quietly in an email to a reporter's mailbox
Quietly in an email to a reporter's mailbox. Conclusion of the negotiations in the international iron ore the first time, CVRD announced to the national media: their own and China's largest steel manufacturer Baosteel has been on the 2008 international agreement on iron ore benchmark prices: the southern system Vale ore powder price based on the ascent in 2007, 65%, Caracas powder ore prices 71%. As expected, Baosteel finally accepted a week ago, Nippon Steel of Japan (Nippon) and POSCO (Posco) has been reached and the Vale of iron ore rose.
Following the iron ore price in 2005 to 71.5% growth recorded in the history of iron ore rose the most, again, 65% gain in the Chinese challenge to the nerve.
Steel without the bottom line
65% of the increase really beyond many people's expectations. 2007 iron ore negotiations, Chinese steel companies due to the joint, and then expect steel prices are far lower than current prices, current iron ore prices rose only 9.5%. The face of the first half of 2008, the shortage of iron ore supply is still in reality, it is generally accepted grid iron ore will increase at over 30% of the expected, while the domestic steel enterprises, "should accept no less than 40% up price increases, "industry experts predict that. Once, a domestic-related large-scale steel enterprise executives said the company can accept the price increase of only 20%? 30%.
However, when the 65% increase was announced, and not many Chinese companies found it difficult to accept, one important reason is that domestic iron ore spot prices higher. Hebei iron ore market, for example, the spot price of fine iron powder of the tax has more than 200 U.S. dollars, and international long-term contract from Brazil to China port CIF up to 140 dollars, Australia to Chinese ports of Powdered Iron, Price only about 90 dollars. In the same spot appeared on the market price and the wide gap between the long-term price. "Supply-side demands a substantial price increase, it is inevitable." Famous steel analyst Xu Xiangchun told "Business Week" interview, think so. In this regard, executive director of CVRD, iron ore head Jose? Carlos? Martins in the first time for the "Business Weekly" interview, also described a similar point of view, he pointed out: "In China, iron ore spot the market's trading volume reached more than 300 million tons per year, while the spot price is much higher than the price of long-term contract price negotiations, in view of this, in 2008 iron ore price is a reasonable result. "
Sync up with the iron ore price is the price of steel. February 25, in the Vale by e-mail the same day the second quarter, Baosteel announced major price increases of 500 tons of steel variety? 1000. "This rises to digest this basically brought about by rising iron ore costs." Xu Xiangchun think.
Since 2007, 19% iron ore price increases since the sharp rise in domestic and international markets for raw materials has long been expected. Therefore, the international steel market prices from the beginning of the year 2008, started up, different varieties of steel per ton rose to 100? 200. Xu Xiangchun to the "Business Weekly" careful calculations of: iron ore rose 65%, if, if only using imported ore, the ore in this part of the cost increase of about 60 U.S. dollars per ton. Today, steel prices have risen 100 per ton? 200 U.S. dollars, the steel price increase iron ore prices already more than the cost increase. Even with the cost of coke and other products, in general, "65% of the increase did not reach the bottom line of China's steel mills." In other words, the 65% gain in the short term, the impact of China's iron and steel enterprises is not large.
China's current pattern of iron and steel enterprises in the supply of iron ore that it was not only dependent on CVRD, BHP Billiton and Rio Tinto that the Big Three imports. From the China Iron and Steel Association statistics show that imports of iron ore demand in China accounts for only about 50%, of which imports from Australia and Brazil accounted for 63% of the ore, the remaining 37% are mainly from India, Russia and South Africa and other countries import , while the benchmark price system into the current system of long-term agreement ore imports to China accounted for only less than 50% of total imports
Iron Ore: The System Began To Shake The Base Price
By: weihua
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