SteelOrbis Shanghai
On May 15, CVRD and ThyssenKrupp reached an agreement on 19% hike on
iron ore prices for 2006 fiscal year, which brings pressure on Chinese steel mills. Chinese
Baosteel also expressed that the result of
iron ore price negotiations might be announced soon, however with an increase different than that of ThyssenKrupp.
Chen Yin from
Baosteel expressed that the result of the
iron ore price negotiation might be announced soon. Zou Jian from CISA stated that as ThyssenKrupp is not the largest steel mill in
Europe, the influence from the agreement is unclear.
Qi Xiangdong from
China Iron & Steel Association (CISA) indicated that the representative of European countries for the price negotiation is Arcelor, not ThyssenKrupp, and this case is similar to the agreements signed by some Chinese steel mills while
Baosteel was participating in the negotiations as a representative of
China. Therefore, ThyssenKrupp's agreement does not have a significant influence according to CISA.
In March, the suppliers and consumers of
iron ore failed to reach a consensus; therefore, they set an observation period to further study the supply and demand relation. Afterwards, Chinese
iron ore prices slightly went down, and the prices of domestic ore have even became lower than those of Indian ore. The sales figure of imported ore is currently not favorable, but the decrease range is limited as the demand is increasing. There is a gap between the prices of the ore sold under long-term contracts and the ore traded in the spot market, giving more support to the suppliers.
Market players think that the current domestic ore prices are at the bottom line, thus, prices are expected to rebound. Though Chinese steel mills still hold “wait-and-see” attitudes with the expectation that prices may fall further, however there is not enough time left to expect a decline.