Iron ore price talks to begin at end of October

The international iron ore price negotiations, held annually to settle the iron ore price between the Chinese steelmakers and the leading iron miners -CVRD, BHP Billiton and Rio Tinto- are expected to begin at the end of October. Differing from last year, China is planning to involve Chinese iron traders in the upcoming talks. China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters (CCCMC) has reportedly prepared a large negotiation group, including 16 steel mills led by Baosteel, and the major iron ore traders such as China Minmetals Corporation and Sinosteel Corporation. China failed to obtain the desired result from the negotiations last year because only one third of China's iron ore imports are made in the annual contracts between the iron miners and steel mills. This means traders have a say in determining the remaining two thirds. Analysts are expecting a 5 to 10 percent increase in iron ore prices for the 2007 contract year, down from the 19 percent increase last year. Some analysts are even expecting a decrease. For example, analysts from Swiss investment company UBS have now reportedly changed their previous forecast of a 10 percent rise to a 5 percent drop. The UBS analysts are also forecasting a 15 percent price drop for 2008.