On March 25, Xu Lejiang, president of Chinese steel giant Baosteel and representative of the Chinese enterprises in the ongoing annual iron ore price talks, stated that Chinese steel enterprises will continue to back the long-term annual price agreement system and will seek to increase the importance of the system. Although in the near future the iron ore monopoly situation is hard to break, he said Chinese enterprises have made some advances in establishing a multiple global resource supply system.
Recently China has been put under pressure to give up the long-term agreement system, with Brazilian miner Vale even setting a quarterly price and bringing it close to the spot market price. In this context, Xu Lejiang said that the negotiations between China and the three giant iron ore producers are still in process. "The fact is iron ore is in short supply for a while and the long-term agreement pricing system which has operated for more than 40 years needs adjustment and improvement. However, a win-win situation should be expected. A single-party decision as opposed to a negotiated decision will harm long-term development for all parties," he said.
Mr. Xu concluded, "Although the iron ore monopoly situation is hard to break in near future, suppliers of iron ore to China have increased and now cover more than 40 countries. A prototype of a multiply-supplier system for iron ore and other raw materials for China has been formed."