At the end of last week it was rumored that in order to guarantee sales volumes, the world's main iron ore suppliers had reached an agreement with the Chinese mills on a 40 percent cut in iron ore prices for the coming fiscal year.
Secretary General of the China Iron and Steel Association (CISA), Shan Shanghua said that the CISA's negotiation principles are that the price settlement should be calculated from January 1 and that the base price of negotiations should return to the level of 2007. All other information regarding the iron ore negotiations will be kept secret for the time being.
Although Brazilian miner VALE later denied this rumor, market players believe that there must be some grounds for it. In the context of the large scale losses suffered by the Chinese mills and the significant production cuts made by the international mills, the CISA is not thought likely to be satisfied by just a slight price reduction.