The secretary general of the China Iron and Steel Association (CISA), Shan Shanghua, has stated that the majority of Chinese steel producers have not yet accepted the quarterly pricing system for iron ore contracts, nor have they inked quarterly purchase contracts with the three global mining giants, i.e., BHP Billiton, Rio Tinto and Vale.
Mr. Shan said that, due to the uncertainty of the global economic recovery caused by the European debt crisis in addition to lower-than-anticipated demand in the global iron ore market, Chinese steel producers have chosen to take a wait-and-see approach. The CISA official went on to state that some Chinese steel enterprises have inked short-term agreements with the mining giants with expiry dates at the end of the month in which the agreements are signed. However, this does not mean that they have accepted the new pricing system, he said.
Mr. Shan said he expects iron ore prices will decline further up to the end of the current year. He also stated that steel prices may decrease due to the lack of clarity in the European market.