China still rejects the inclusion of a freight premium in the 2008 iron ore prices in its negotiations with Australian iron ore supplies, an official from the China Iron and Steel Association has stated.
Since, according to some annual contracts, Australian miners need no longer ship their iron ore to Chinese customers after June 30, following this date the Chinese steel industry may face a huge shortage of iron ore in the market. In this event, Chinese steelmakers will have no choice but to buy Australian iron ore on the spot market, where the price is higher than that currently being proposed by the Australians at the negotiations.
Regardless of this perspective, Chinese steelmakers are still rejecting the proposals of the Australian miners.