Zhou Zhongshu, president of China Minmetals Corporation, has said at the China Mining Congress & Expo 2009 held at Tianjin Binhai International Convention and Exhibition Center (BICEC) on October 20-22 that the main global iron ore suppliers should first establish iron ore prices for the Chinese market in the context of the annual international supply contract talks.
Mr. Zhou went on to say that iron ore pricing has been a disturbing problem over the years due to the opposition between suppliers and buyers, which has been unfavorable for cooperation in the international arena.
The president of China Minmetals Corp. suggested that major suppliers should consider first establish an iron ore price for the Chinese market in the upcoming new round of talks for the international iron ore contract prices. As the world's largest iron ore consumer with a rapidly expanding market, China should not be simply forced to accept prices set first for other importing countries.
Moreover, according to Mr. Zhou, iron ore pricing should also give consideration to the ex-factory prices of downstream products. Iron ore prices are directly linked to the production costs and ex-factory prices of steel products, and excessively high prices of iron ore could squeeze the profit ranges of mills and even cause losses. In fact, many Chinese mills have suffered losses this year, resulting to a certain extent from the high costs of iron ore. In turn, Mr. Zhou concluded, the losses suffered by Chinese mills will ultimately affect the overall demand for iron ore in the global market.