Rio Tinto iron ore negotiations from the beginning of proposed 40% price increase implied, to BHP Billiton in February began to put forward in accordance with the Association or 50% for long-term interim settlement price, up to the present Vale's price increase came 90% of the negotiations require ... ... 3 big giant hard-line attitude toward the negotiations, decided to continue the negotiations at a stalemate.
The asking price in their frenzied behind, which means this year, China's steel industry may have to pay more than the cost of hundreds of billions. The current rising steel prices can be seen, iron and steel cost pressures will gradually move downstream, the risk of imported inflation is getting worse.
90% price increase is equal to 15 billion U.S. dollars
Two sessions in the just-concluded period, foreign media reported that Vale had been unilaterally asking price up to 80% -90%, and a steel plant sources, because the prices are expected to divergence, the three mines had been suspended and the Chinese steel mills of the price negotiations.
For the steel, the price rises 90% mean?
In an interview with the industry, "Economic Information Daily," an interview, said, according to last year's price of a long association, the Brazilian ore price should be around 55 U.S. dollars (not including ocean freight), if up 90%, which means the price to rise 50 U.S. dollars / ton . If the 300 million tons last year, according to a long co-calculate the volume of imports this year, the import of steel long association mining have to pay 15 billion U.S. dollars, equivalent to 102.4 billion yuan.
According to data provided by China Steel Association, included 68 large and medium size statistics in 2009 iron and steel enterprises realized profits of 55.388 billion yuan only. "Chinese steel mills hard year's profits, just enough to pay half of that number." Industry lament made by Road.
This is only part of the losses, industry sources said the steel mill ore imports last year reached 630 million tons, of which spot volume of imports reached 300 million tons more, from the current situation, the three mines are reducing long association Mine supply and physical demand for iron ore this year, may be more, and long co-ore prices rose higher spot market prices will inevitably push. Combined purchase of stock, steel mills to pay the amount of 15 billion U.S. dollars will be much higher than this figure.
Even more dangerous is that, different from the past, Vale do Rio Doce rose 90 percent this proposed requirement is not driven by rising sea freight. According to the joint metal mesh statistics, at present Brazil to the China Sea freight 29.8 U.S. dollars / ton, sea freight from Australia to China was 13.1 U.S. dollars / ton, sea freight is still low. With the arrival of the procurement cycle of iron ore in April, sea freight prices will also rise, steel mills need to pay higher costs.
"This is not addressed to the three mines to work, this is a die ah." Laments a steel enterprise CEOs. He told reporters that this is an unaffordable figure, iron and steel industry to pay more for iron ore cost several hundred billion dollars.
Short term, the results from the negotiations
A large-scale steel insider told the "Economic Information Daily," In fact, if ore price rises above 40%, the current steel prices could not cover the cost of steel can only be a loss.
Frankly these people, not just China, the three mines is asking for Japan and the European Union are also difficult to accept. It is understood that the price increases demand for the CVRD, the European Union, the steel industry's official Web site a statement that prices for iron ore company claims that some 80% -90% very indignant at this price rise will be a drag on economic recovery, even the economy back into recession. It is understood that the European steel prices about 80% of the ore supply from the Vale.
"From the European Steel Union responses can be seen, they may have been before, and CVRD had numerous rounds of negotiations and consultations, but could not reach a consensus." A senior industry source said, in fact, the current iron ore giants, " exorbitant demands ", but to Japan, China and the European Union gathered in the same three positions.
There is a case worth noting, even in the global economy is almost bottomed out last year, when the iron ore production may still be up to 50% of the EBIT margin, while the same period, the sharp drop in performance of the steel industry, Europe's number one steel-an Cyprus Le Mittal 2009 fiscal year reached 1.68 billion U.S. dollars or even a loss.
China Steel Association relevant person in charge of the "Economic Information Daily," frankly, if the negotiations goes well, the three mines which should have, and Japan reached an agreement on price, it now appears the negotiations will continue in the short term stalemate. The reason why the Big Three high-profile thrown their asking price, while taking the practice to suspend the negotiations, and indeed negotiated prices are expected to improve, pushing spot prices higher, and gradually to bear the cost of testing the steel mill bottom line.
Ore price rise has raised the prices of steel products is expected to start
National Bureau of Statistics data show that in February China's crude steel, pig iron and steel output of 50.36 million tons, respectively, 47.5 million tons and 55.59 million tons, respectively, year on year growth of 22.5%, 17.2% and 18.1%. The China Steel Association statistics, and medium-sized steel enterprises in February average daily output of innovation as many as 180 million tons, last year's daily average of the highest yield is only 1.69 million tons.
The China Steel Association official said, according to February production basis, annual steel output will reach 670 million tons, compared with 2009 increased by 1 million tons, compared to this astonishing.
According to statistics, only 3 11, there are 34 domestic manufacturers of construction steel prices were 30 yuan -50 yuan / ton increase ranging.
His concern is that because of the presence of a large number of traders, steel mills simply can not determine the real effective demand, and more can not predict the latter part of steel prices, if market demand falls, steel mills will face the unbearable loss.