The annual iron ore contract price negotiations heat up. During the 9th International Steel and Raw Materials Conference in Qingdao on October 16, China Iron and Steel Association (CISA) secretary general Shan Shanghua stated three principles in the new system of iron ore imports targeting by the Chinese side. Firstly, the annual iron ore contracts should be effective from January 1 to December 31; secondly, quantity should be considered in setting long-term iron ore prices, with a larger discount given for bigger demand; thirdly, suppliers can only sell their iron ore to Chinese enterprises at the agreed unified price after signing long-term iron ore contracts.
Mr. Shan said that China would be seeking to match the long-term contracts for iron ore with the Chinese fiscal year, thereby bringing the long-term contracts more into harmony with the accounting system of the Chinese mills, which would be beneficial for their performance evaluation.
Speaking regarding the unified price for Chinese iron ore imports, Mr. Shan explained that there would be no long-term price and no spot ore price, only one unified price, which would be determined based on the principles of mutual benefits and joint development. China would not blindly follow prices set in other importing countries such as Japan and South Korea.
The use of a system of agents will be key to regulating China's imported ore market, Mr. Shan said. Officially qualified importers would strictly comply with the distributing agent system so as to ensure that small mills can buy iron ore at reasonable price levels.