Baosteel: Big Chinese mills will not buy iron ore from spot market

Friday, 16 July 2010 17:04:39 (GMT+2)

Xu Lejiang, president of Chinese steel giant Baosteel Group, has affirmed that Chinese steel manufacturers have not yet compromised on the issue of the quarterly pricing system with the three global mining giants (i.e., BHP Billiton, Rio Tinto and Vale), but instead they have been importing iron ore supplies at more temporary contract prices.

Mr. Xu also stated that even at lower spot prices the large Chinese steel producers would still not turn to the spot market. Baosteel had previously predicted that iron ore spot prices in the third quarter of this year would be lower than contract price levels.

In 2009, the volume of iron ore imported into China reached 628 million mt. Given the high level of iron ore prices and weak trend of steel sales prices in the domestic market, some small mills with limited financing channels have slowed down their production operations.

Mr. Xu also stated that he expects that China's iron ore import volume in 2010 will be comparable to last year's volume.

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