There are still no indications that the Chinese side and the three mines of any tangible progress in negotiations. But, before the silence is different from Brazil's CVRD recently reaffirmed in the global iron ore market, selling the extent not in a hurry, and the Chinese negotiators. Before and after less than a day, mining giant BHP Billiton also announced the company's last year's high-profile second-quarter iron ore output and demand.

In the concerted, unified behind the rhetoric, the negotiation strength of the attitude of the three mines is fully exposed: in the strong global demand environment, the three mines will continue to raise the stake. More importantly, with the three major mines and Japan-South Korea negotiations forward, the Chinese negotiators increasingly severe pressure.

Ore output of another record high

Mining giant once again proved their data used in the production of iron ore Buchou Mai. BHP Billiton 20, said that China and the developed economies due to strong demand-driven recovery in commodity prices, the company as at December 31, 2009 second-quarter iron ore output was 32.45 million tons, a record high last year compared 29.4 million tons over the same period increased 11%.

Is almost the same time, Brazil's Vale to the company's operating performance is also very optimistic about the situation. If Zemadingsi CVRD executive director, said in an interview is expected this year, CVRD's iron ore sales in 2008 will exceed 2.8 million tons.

BHP Billiton said in a statement, developed economies, most of the key economic indicators showed signs of improvement. Facts have proved that, due to the gradual recovery in the global economy, automotive manufacturers and builders rebound in demand for steel, market recovery in Europe, China and other Asian countries to increase their iron ore imports, so that a sustained hot iron ore market. World Steel Association, pointed out that the United States, Japan and Europe, demand has begun to increase in the global steel market in 2010 is expected to grow by 9.2%.

There is no doubt that mining giant in the negotiations become more powerful, even if relations with China, "better" Vale is no exception. If Zemadingsi said CVRD in no hurry to negotiate, because the majority of the company until the contract expires in April.

Although the three mines for the price of a specific or tight-lipped, but foreign institutions have begun to raise price expectations. Goldman Sachs will be long before the Association for price increases from 20% upwards to 35%. Merrill Lynch co-price gains for long forecast has risen to 50%, after only 15%. Nomura Holdings, Japan institutional investors also believe that price will be a long association rose 50%.

An industry source said, foreign institutions forecasts and closely linked to the intention of the three mines. In general, foreign institutions tend to increase the forecast market expectations, after which further raised the spot market price. This time the three mines will be a lot more talk about the price advantage, seemingly well-deserved price increases will be more quickly accepted by the market.

Steel worry about "no rice on"

Because in 2008 the market is not good, a lot of steel mills had to abandon the contrary, executive director of the Association ran the spot market to buy mineral ores, the present situation, the most difficult days than those steel mills, and three mine is unwilling to impose it as increase supply.

Because of this, a lot of steel mills and three mines have also been many exchanges, hoping to get some more shipments, but the three major mines in 2008, the market had a bad time to expand a lot of private steel mills for long-term co-Client , because to meet more demand side, even if the mine to increase the supply, but some large-scale steel mills may also be part of the ore have been diverted to these new customers. For the three major mines, they will also give priority to supply to the pre-compliance good business and some new customers.

On the other hand, the three mines to stop the supply of stock has caused a serious shortage of cash market, not only the price is very high, purchasing them is also very difficult.

It is understood that, despite the current short-term spot prices fell momentum, but still stood at CIF 131-133 U.S. dollars / ton.

Japan or China to conclude the negotiations before

The three mines from the current negotiations on the attitude of analysis, if the Chinese-led negotiations, the three major iron ore mine will be to raise the spot market prices as the benchmark for the negotiations asking price. Meanwhile, the steel price increases, at a high demand for steel production and downstream prices will become favorable evidence in the three mines.

Even if the stalemate in the negotiations period, the three mines will increase or decrease in stock through the supply of random spot price regulation. Coupled with scattered steel, iron ore market disorder, and even hand the greatest demand, China's actual bargaining chip is also very weak.

From the time point of view, the three mines so far not been any substantive talks with the Chinese side. On the contrary, and the Japan-South Korea negotiations are moving forward in accordance with established practice. On the other hand, Japan has a long association with a unified demand for ore and price negotiation up relatively well.

Based on past experience to determine, Nippon Steel will not only return on equity of overseas mining can also be adopted and signed a long-term agreements to lock in the lower cost, and therefore the capacity of iron ore prices strong. China is forced to follow if you choose, steel mills are likely to face a much higher than expected cost pressures, once the market changes, lower steel prices, steel mills can not survive will face difficulties.