SteelOrbis Shanghai
The chairman of Indian mining giant MMTC Ltd, Sanjiv Batra, lately disclosed that "the Indian government has already approved the proposal of signing a long-term iron ore supply contract with Chinese steel enterprises, and we are now in detailed discussions about this issue."
Chinese steel enterprises have long been hoping to sign a long-term supply agreement with Indian mining enterprises, similar to the agreements inked with the three major global mining giants; however, due to short supplies of iron ore, up to now they failed to achieve this goal. Moreover, the expanding gap between spot prices of Indian ore and long-term contract prices also encouraged the global iron ore giants to ask for price hikes in the price negotiations of the past several years.
The situation has since changed. During the second half of this year, the deceleration of steel demand has caused iron ore demand to become increasingly sluggish, resulting in a strong decline in spot prices of Indian ore. As a result, the spot price levels are now even lower than the long-term contract prices, and this has created an opportunity for the two countries to reach an agreement on the issue of long-term supply contracts.