October 12, 2008

Iron ore price negotiations –CISA dismisses 85% rumor on poor spot sentiments

The flurry of reports in the Australian media claiming the Australian iron ore miners will likely to win 85% rise over 2008 prices has left the Chinese decidedly unmoved.

Senior official of China Iron & Steel Association has reiterated on Apr 29th 2008 that Chinese steel mills would not concede to freight premium demand, and they have already been well prepared once the benchmark ore talks with Australian have failed to bear fruit before June 30th 2008.

The report argued that a strong view was building within the Chinese industry that the Australian miners would get the 85% hike because Chinese steel mills are already paying much higher prices on spot compared to the benchmark price.

The report cited a Hong Kong trader as saying that "It is widely expected that the market risk is accumulating at the moment, since the iron ore fever has already persisted for nearly 7 months since July 2007. Right now, everyone is very cautious in purchasing new stock."

Iron ore stockpiles held at Chinese ports reached a record 62 million tonnes at the moment because buyers increased imports on expectations prices will rise couple of weeks before. The iron ore stock has occupied some USD 4.2 billion given the average import price of USD 180 per tonne.

(Sourced fromMySteel.net)