SteelOrbis Shanghai
The tension between
China and
Australia was the event of last week while the actual
iron ore market remained in a stable trend.
Last week, Chinese Ministry of Commerce announced a tentative restriction measure that ban import prices over $54/mt for Australian ore and $70/mt for Brazilian ore. The measure aroused Australian government's close interest. The Chinese Ministry of Commerce later cancelled the policy and resumed the previous registration system. Thus, the strained situation alleviated.
Yesterday, March 16, the National Development and Reform Commission and the Ministry of Commerce made a joint declaration stating that the Chinese government keeps a close eye on the 2006 long term
iron ore price negotiations and that the pricing of
iron ore should be in the interest of establishing a fair international economic order as well as realizing the win-win solution for both parties.
A market researcher in the Ministry of Commerce pointed out that the buyers and sellers of
iron ore were not even. According to the researcher, the seller party constitutes a monopoly while the buyer party is highly diversified, requiring the intervention of the government.
Nevertheless,
Australia does not agree with it. The Chinese government's intervention in the
iron ore price negotiations aroused immediate reactions in
Australia. The person in charge of the Australian steel industry noted that the Chinese government should not intervene in the price negotiations of importers and exporters.
The Brazilian Ministry of Foreign Affairs commented on Wednesday, March 15, that Chinese government should clarify whether it would intervene in the
iron ore price negotiations.
Things got more complicated as
India also joined in the price negotiations. Indian
iron ore producers also want to hike their prices by 5 to 8 percent. Besides, Indian steelmakers hope Indian government to reduce
iron ore supply to South
Korea and
Japan, and not supply
iron ore to
China at all in order to meet the domestic
iron ore demand in
India.
Chinese government's efforts are not expected to outplay the market forces.
Meanwhile, the Chinese
iron ore market remained stable, yet, the commercial activity did not pick up. The imported
iron ore prices have seen minor fluctuations, and both the inventories at ports and the ocean
freight kept going down.
Some steel mills lowered their purchasing prices, which had hardly any influence on the overall market condition.
The quantity of
iron ore at ports had increased considerably after market players' large purchases in a short time with the expectation of an increase in
iron ore prices. However, since last week, the quantities experienced a sharp fall due to the cessation of large purchasing activities. Therefore, ocean
freight went down as well. Currently, the ocean
freight for shipments from
Brazil to
China is at $23,541/mt, down $1,395/mt from a week ago, and from West
Australia to
China is at $10,370/mt, down $1,205/mt. According to the data released on March 3, the total inventory of
China's eighteen major ports was at 35.96 million metric tons, down 240,000 metric tons weekly.