China-Brazil Iron Ore Spat Stays Ugly
VALE, Brazil's and the world's largest iron ore supplier, has demanded a price hike over the long-term contract price it had already negotiated with Asian steelmakers for 2008. They are being resisted by Chinese steel makers, who are considering using domestic iron ores with lower quality, or importing more iron ore on the spot market from India. China's steel industry is slowing and its demand for iron ore looks also to decrease.
China's Slumping Steel Industry Angry over Vale's "Extortion"
In answer to the boycott staged against its price hike by Chinese steelmakers, Brazilian iron ore miner Vale has employed its trump card-refusing to provide ore. Prior to this, on the ground that the "reference price of the Asian market is lower than that of the European market," Vale hoped to increase prices by 11% to 11.5%.
Vale's Demands Encourage China's Scattered Steel Industry Consolidation
Shortly after the dragged-on 2008 negotiation for long-term iron ore supply contracts concluded, Brazil-based Vale, the world's largest iron ore supplier, seeing it had been out-bargained in the China market by its vast Australian competitors BHP Billiton and Rio Tinto, is doing its best to raise its present contracted iron ore price for Chinese and other Asian steel makers in 2008 by as high as 20%. This has naturally triggered a strong reaction from Chinese steelmakers. In response, some analysts are suggesting that China's dispersed steel industry should form a few sourcing groups to gain some leverage in their upcoming negotiation with the world's three iron ore giants for the long-term iron ore supply contract in 2009.
Zinc Output Cut – A Short-Sighted Strategy
At a lead and zinc industry forum last Saturday, 27 Chinese smelting firms, including Sichuan Hongda and Henan Yuguang Gold and Lead, jointly announced a plan to cut zinc and lead production, by 10% from July to September, to boost prices, which have been falling sharply in the past year. The move, together with the decision two days earlier by major aluminum smelters to cut capacity by 5% to 10%,reflects supply-demand problems for China's nonferrous metal industry.
Shipping Fares Plummet as Sino-Aussie Iron Ore Deal Stymied
Chinese-Australian iron ore negotiations are at a stand still, and Chinese steel companies are beginning to dip into the large iron ore stores they have sitting in the country's ports. Shipments of the stuff from Australia and Brazil have been suspended and international shipping fares, lately on the steady increase, have taken a big hit.
China Warns India: Spot Trading Iron Ore Has to Go
The long-slog iron ore negotiations between China and Australia are stalemated, and Chinese steel makers are now beginning to turn up the heat on some of their other trading partners. Pressure is landing on Indian iron ore companies, who have been favoring the expensive spot trade market to more economical and trustworthy long-term trading contracts.
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