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Mining industry

Chinese Steel Mills Agree to Provisional Iron Ore Prices

Strategic Insights

— 1 min read

Some Chinese steel mills have agreed to tentative prices for iron ore, executives from three Chinese steel companies said on Wednesday. Hebei Iron and Steel Group has reached a tentative price of a 33% discount from last year's benchmark rate with both Rio Tinto PLC and BHP Billiton Ltd. However, steel mills and suppliers are still in talks for a final pricing agreement. Provisional prices for shipments after April 1 have been about 60%-80% of last year's price.

Key Takeaways:

  • Chinese steel mills, including Hebei Iron and Steel Group, Baosteel, Shougang Group, and Anshan Iron and Steel Group, have agreed to provisional prices for iron ore with Rio Tinto PLC.
  • The provisional prices are for a 33% discount from last year's benchmark rate.
  • The deals were struck for the 2009-2010 contract year, but do not represent a final term price agreement.
  • Steel mills and suppliers are still in talks for a final pricing agreement.
  • Provisional prices for shipments after April 1 have been about 60%-80% of last year's price.
  • The Chinese steel industry is closely tied to the global market, with many analysts watching developments in the industry closely.
  • Analysts, such as Hu Kai from Umetal, have reported on the provisional agreements and their implications for the industry.

Statistics:

  • 60%-80%: Provisional prices for shipments after April 1 as a percentage of last year's price.
  • 33%: Discount from last year's benchmark rate agreed to by Hebei Iron and Steel Group with Rio Tinto PLC and BHP Billiton Ltd.
  • 2009-2010: Contract year for which the provisional prices are being negotiated.
  • 90.70: Price of Rio Tinto PLC on December 12, 2008, when an UPTREND was first indicated by Comtex SmarTrend.

Sources:

  • Dow Jones Commodities News via Comtex (Beijing, Jul 15, 2009)
  • Dow Jones Newswires; 8610 6588 5848; chuin-wei.yap@dowjones.com
  • Comtex SmarTrend Alert, an automated pattern recognition system
  • Comtex News Network, Inc. Copyright 2004-2009, All rights reserved.

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