Hubei Province-based Chinese steelmaker Wuhan Iron and Steel (Group) Corporation (WISCO) has announced that it expects to cut its iron ore purchasing costs by RMB 900 million ($142.18 million) this year as compared to last year, having varied its mode of iron ore purchases.
Before 2008, WISCO purchased most of its overseas iron ore supplies via long-term contracts concluded at annual negotiations. Accordingly, the steelmaker was under greater pressure from the big global iron ore miners, while its iron ore prices and production costs remained at high levels. However, with the advent of the financial crisis, WISCO looked for other sources of iron ore and eventually signed a long-term purchasing contract with Venezuelan Mining Group.
This year, WISCO has combined long-term iron ore purchases with spot market purchases due to the fluctuating trend in the iron ore market. In March and April, for example, WISCO seized the opportunity to purchase 300,000 mt of fine ore when market prices were low.