The China Iron & Steel Association (CISA) has decided as a result of a work conference held on July 13, 2007, to retain Baosteel as the leader of the Chinese iron ore buyers for the 2008 long-term iron ore negations.
At the conference, which took place with the participation of 16 major Chinese mills, the mills also decided to continue signing contracts on an FOB basis, thus rejecting proposals for a switch to CIF. However, the mills also agreed to support Brazilian iron ore miner CVRD's plan to build stockyards at the ports of Shanghai and Rizhao in order to reduce its freight costs.
CISA predicts that iron ore supply and demand will reach equilibrium in the fiscal year of 2007-2008, with supply possibly even surpassing demand. According to CISA general secretary Luo Bingsheng, China will import 367 million tons of iron ore in 2007. Meanwhile, international institutes generally predict that China will import 400 million tons of iron ore.
Furthermore, Luo Binsheng claimed that CVRD, BHP Billiton and Rio Tinto have intentionally reduced their output in order to boost prices for next year's talks.