Baosteel denies acceptance of 23 percent iron ore price hike for Q3

Friday, 18 June 2010 13:33:23 (GMT+2)

On June 17, some foreign media sources indicated that major Chinese steelmaker Baosteel, the representative of the Chinese side in the iron ore contract price negotiations with Australian miners Rio Tinto and BHP Billiton, had accepted a 23 percent increase in iron ore prices for the third quarter, with the result that China would be paying $147/mt for iron ore (excluding freight charges) in Q3. The increase margin would thus be the same as for Japanese steelmakers.

However, later on the same day, Chen Ying, board secretary of Baosteel, rejected the reports in question, stating, "I have not heard from Baosteel that it has accepted the 23 percent iron ore price increase."

Some analysts indicate it is possible that China may accept the 23 percent increase in iron ore prices as it does not want its relationship with the iron ore suppliers to enter a deadlock situation. However, acceptance of such an increase would be likely to increase the pressure on Chinese steelmakers, especially the smaller ones.

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