China Steel Association will be on the 4th closed-door meeting will discuss the iron ore talks
Big Three tricks "China model" is difficult Ru Yuan
Journalists reporting from Beijing Yang Ye
China Iron and Steel Industry Association, director of 200 years (enlarged) meeting is scheduled to be held on February 4, has been the industry known as the "closed-door meeting" of the president of the Conference office will also be held the afternoon of 4, in accordance with usual practice, iron ore negotiations will be has become an important discussion.
On the table for what could that be? Among the various speculations can be sure that there is no progress in the negotiations and the three iron ore giants set up obstacles in front of the high demand for iron ore, the China Steel Association claimed early stages of negotiations "China model" and the "China price" has been reached on whether to adjust or change an important juncture.
Focus on a pressure: the Big Three tricks
Placed in front of the Chinese side, there is no progress in negotiations and the three iron ore giants set up obstacles.
While it can not provide more details, but an insider close to iron ore negotiations in the acceptance of "Economic Information Daily," an interview frankly, at present, iron ore negotiations start, Baosteel has Rio Tinto, BHP expansion talks However, the situation is not optimistic about the progress of the negotiations is also very slow.
The sources said the Chinese steel market demand in a process of steady growth, the demand for iron ore has increased, China's bargaining power is small, the negotiations are far apart. More importantly, in 2008, when iron ore spot prices drop, the Chinese steel market downturn the grounds that should have been postponed or even canceled co-chief executive of the mine, but a large number of buying in the spot market low-priced ore, This is not the practice of faith has given way to mine very annoyed, coupled with last year's negotiations, the Chinese side did not accept the so-called "Japan-South Korea starting price", the three major mines and Chinese are not keen on negotiations.
To make matters worse things that do not stop here, the three giants at different times in different occasions foreign declared that "in no hurry to negotiate", it is also a step by step to achieve with their own "China plans": first through the sea, causing a large number of charter illusion of tension, which has raised the sea freight; the same time by reducing the spot to put mine pulled ore spot prices, and then begin to reduce the supply of part of a long association, a number of steel mills to customers next year, a long throw down the supply requirements of the Association, by this opportunity to manufacture steel iron ore panic, and further raised the spot price, until recently renewed rumors of 2 Extension to abandon China's move to negotiate with Japan and South Korea.
"Economic Information Daily," a veteran reporter from received confirmation of the current two Billiton and Nippon Steel negotiations were under way, progress more smoothly, but the price range is still open to question being, there is no finalized.
But this does not mean giving up the three mines in China. These people said that from last year's actual situation, even though China and the three major mines, and did not reach a long-term agreement, but in reality the three major mines, steel mills and all the synergies are not a long stagnation, as of now, the three mines are still to steel to provide the minerals, which also shows the attitude of the Big Three bargaining strength of the intention behind it is only one: to increase bargaining chips to obtain a higher iron ore prices.
My steel net advisory director Xu Xiangchun not without worries that the three mines will continue through a variety of means to influence iron ore market and price, in order to create a more solid foundation for price increases.
Focus 2 Status: "Chinese model" of converting Ru Yuan
The beginning of negotiations, China's Steel Association in Qingdao, the Secretary-General Shan Shanghua publicly announced at a meeting of this year's imports of iron ore price negotiation objectives long association, with China the fiscal year of the contract period (January 1 implementation of the new fiscal year starting price of ); bulk concessions, a large quantity discounts should be more; unified national price; China would not "blindly follow" other countries on the outcome of negotiations. These four targets are seen as iron ore negotiations "China model" of the core elements.
"At present practical point of view, 'Chinese model' in practice very difficult." Shougang Research Institute of the former vice president of Dai Guoqing In an interview, "Economic Information Daily" reporter said in an interview. He said that, first of all, if the annual price effect from January 1 implementation, the present result will be price increases in advance, so that has been relatively low in the implementation of three months in advance to terminate. For the Chinese steel mills is also meant to pay extra costs. In addition, if the current market situation analysis, steel market picking up, steel production can not decline also means the iron ore demand is rigid, in steel mills scattered cases, the high demand has become the asking price for the three mines favorable chip is difficult to ask for more concessions.
Dai Guoqing told reporters that the Chinese negotiators at a disadvantage in the circumstances, to require the signing of a long association the Big Three can no longer sell the contract does not require a realistic spot mine. On the one hand, long-term ore sales outside the contract matters, should not have long co-Ore supply agreements that the above-mentioned requirements, etc. So to change a long co-supply contract. In addition, the Chinese spot ore market, there is the difference between long-Concord, which is manipulation of the three major mines in China and an important way to use the opportunity to reap excessive profits, of course, will not give up easily.
A high-level state-owned steel mill told the "Economic Information Daily" reporter, despite the current price of steel is to use Japan and South Korea as a temporary price settlement, but there are still many variables. Because prices are not set to talk about the current bullish attitude heavy iron ore market, some traders and domestic mines have begun to stockpile reluctant sellers, the market supply is very tight spot. Once again, the three mines to reduce the supply of long association, steel mills have to go to the spot market purchases of ore, not only the cost of changing a lot of the production and operation is also very unfavorable. "The sooner the end of a long association negotiations, the more favorable terms for our steel mills." Admitted the above-mentioned persons.
Focus on three to speculate: negotiation strategies need to be flexible to change
Although they do not advance to obtain precise information about the meeting, but industry sources, the discussion will certainly be related to iron ore negotiation strategy, as well as previously published "China model" and the "China price." Dai Guoqing told reporters that "China model", if only as a condition of China's bid is negotiable, can be changed, but the bottom line if it is as immutable, it is bound to China's actual negotiations are extremely unfavorable.
On the one hand, from the current situation, in the last year, the Association negotiated a long price available, which means this year, China has not and the price of the three mines the basis for negotiations, coupled with China's spot market prices have risen to 130 U.S. dollars / ton, Three mines have been negotiating the price as an important reference, the Chinese side is very difficult to obtain preferential prices. This case, if the over-insist on the so-called "China model" that may lead to negotiations continued deadlock.
The other hand, the high rate of China's iron and steel enterprises started this year's crude steel production has nearly 570 million tons, while next year's steel demand will also remain stable, in such circumstances, the prices of raw materials required to be are psychologically prepared. A comparison of Japan and Korea, Europe and the United States steel market is far worse than China, the basic is still picking up, especially in the fourth quarter of Japan's Nippon Steel reported a fourth quarter of Nippon Steel's crude steel output of 8.72 million tons, with sales for 507 million U.S. dollars, down 35.1 percent. "From this perspective, the NSC's market pressure ratio of us to maintain low-cost requirements are even stronger than we are." Wearing a National Day told reporters.
Dai Guoqing believe that this time may be appropriately diluted, "starting price" to take wait and see, or directly with Japan and South Korea and European steel companies to communicate and cooperate with the completion of the negotiations as soon as possible, the results came out, think it is acceptable to follow up on at any time. On the other hand, steel mills can also take the initiative, using their own identity as a great customer and with the good cooperation between the three mines relations, settlement discounts through the end of a flexible manner, to achieve "a large quantity discount" objective. In addition, the steel should choose the timing, right in the sea freight at a lower price to lock-sea COA (long-term charter contracts).
Xu Xiangchun In an interview, "Economic Information Daily," an interview said that, in addition to not revealing the price of the bottom line, this year's negotiations to choose a more flexible approach, it is noteworthy because the Chinese side and the Nippon Steel imports of ore types are the "pink Mine "and" lump ore, "Nippon Steel to negotiate a" starting price "may be low-rise blocks of ore, powder ore or high, the Chinese side is negative. Therefore, should not be "only to follow the non-negotiation." Can be based on the current steel prices and iron ore prices the opportunity to create the conditions to take the initiative to find more breakthroughs and opportunities for negotiation.
Focus 4 rumors: two Billiton rose 40% bottom line
Recent media news that Rio Tinto has completed the first round of negotiations on Japan-South Korea, which required a long association in 2010 iron ore prices in 2009 on the basis of prices around 40%. "Economic Information Daily" reporter immediately to the relevant persons are confirmed, this is just the asking price for Rio Tinto, the price has not been finalized, there is the possibility of bargaining.
According to reliable sources, Rio Tinto and Japan and South Korea is currently negotiating smoothly, at the beginning of this year's iron ore negotiations, Japan and South Korea agree iron ore price hikes steel prices has been the trend, the two sides is the game where price increases.
In addition BHP Billiton recently the "old tune," saying that efforts to promote index pricing, trying to annual contracts and spot market movements linked. But analysts said that apart from China resolutely opposes the exception, as Vale do Rio Doce and Rio Tinto's attitude is still biased in favor of the maintenance of a long association, so the promotion index BHP Billiton not be feasible in the short term pricing.
It is understood that, as concluded that China's demand for iron ore continued to rise in 2010, the three major mines are part of the expansion project has been launched. Recently the world's biggest mining giants BHP Billiton up 1.93 billion U.S. dollars approved expansion plans.
According to the China Metallurgical Industry Planning Research Institute of the latest report, "2010 Situation Analysis and Forecast of China Iron and Steel" and expects 2010 domestic steel production capacity continues to increase. In 2009, China's steel production capacity of about 700 million tons, to a record high.
