Faced with the current circulating rumor that China side would concede in the ongoing annual iron ore negotiation, the general secretary of Chinese Iron and Steel Association (CISA) Shan Shanghua imposed once again, ‘We will absolutely not accept the 33 percent decrease in iron ore contract price.'
As Mr Shan pointed out, the result of the annual iron ore negotiation should reflect the current situation of the international iron ore market in an objective way. In late May, Japan's Nippon Steel Corp accepted a 33 percent decrease in iron ore price with Australian iron ore giant Rio Tinto, when the AUD exchange rate against US dollar had fallen by 35 percent, which means a higher iron ore contract price for the current year compared with that of last year. Thus, Mr Shan expressed, China wouldn't accept such amplitude.
Concerning the recent report from the foreign media that a Chinese state-owned mill was privately bargaining with Rio Tinto to persuade the latter of an Index Pricing Policy, Mr Shan said, none of the member companies of the association has the rights to hold iron ore negotiation in private, which won't take effect.
According to the Self-discipline Agreement of Imports of Iron 0res by CISA, Baosteel is the only one steel producer authorized by CISA to negotiate with the foreign mines, while other members are forbidden to negotiate with mines in private, unless they retreat from CISA.
Furthermore, Mr. Shan added that CISA is strongly against the iron ore joint venture to be established by Rio Tinto and BHP Billiton, which will become the only one mine in Australia with monopoly operation.
Mr. Shan believed the establishment of the joint venture in question has greater impacts on China, compared with that in 2007 BHP Billiton put forward to purchase Rio Tinto. He said, "In the Chinese iron ore market, nearly half of the demand has to be met by imports, and imports from BHP Billiton and Rio Tinto account for over half of the total imports of iron ores."