SteelOrbis Shanghai
In response to rumors that five Chinese steel producers have agreed to the price hike sought by Brazilian mining giant Companhia Vale do Rio Doce (Vale) for some iron ore varieties, the China Iron & Steel Association (CISA) yesterday declared that all Chinese steel enterprises have rejected Vale's demand.
Speaking on the issue, a CISA spokesman said that all the reports in question are totally without foundation, adding that Wuhan Iron & Steel Co. and certain other steel enterprises have not accepted any of Vale's requests for a price hike. Besides, the CISA spokesman said, it is impossible for Chinese steel enterprises to accept any iron ore price hikes due to the current softness of the markets.
The CISA official also pointed out that, at present, with the sharp decline seen in domestic and import iron ore prices, there is a great deal of iron ore stockpiled at China's ports and that steel mill inventories also remain at high levels. He went on to say that China currently has enough domestic iron ore to replace Brazilian ore supplies and, thereby, is able to ensure normal production of domestic steel enterprises. Besides, the official added, due to the considerable drop in prices in China's steel markets and given the high costs of the steel mills, many producers find themselves in difficult financial circumstances, and some are reducing production or have stopped production altogether. In conclusion, the CISA spokesman said that another iron ore price rise would cause steel mills to register further losses and so Chinese steel producers would never accept the price hike sought by Vale.