CVRD iron ore out of the negotiations

Bargaining power will be handed over to Rio Tinto and BHP Billiton

April 28, Vale do Rio Doce (VALE) manager head of China Zhu to this reporter’s interview, said: “We have extracted from this year’s steel ore dialogues, will make source to other mines and hard metal mills in China to converse the price.”

I am vice head of the hard metal mesh, said: “In 2008, CVRD and Chinese hard metal costs the least charge accord, they study the classes of last year, will be bargaining to the Rio Tinto and BHP Billiton to view frontwards to converse higher the price. ”

At present, due to the Association in 2008 and long has been the high cost of almost 50% of the worth there, the Chinese iron alloy mills have said that the Society no longer acknowledges a long value. However, Zhu said: “Our long-Association agreement rate, have not been affected.”

Not long before, the Chinese Iron and Steel Industry Association (referred to as “China Steel Association”), the Secretary-General, advised this reporter solitary Shanghua that CVRD is the foundation of an interim cost arrange in 2008 to less than 20% of the bond charge to the Chinese hard metal costs the sale of steel ore vegetation, the divergence will be the bond charge accepted in 2009 after the supplement.

Zhu said: “So far, we have long provided the Association is mine, the price according to the Association in 2008 at the implementation of the long, not in the spot market for low-cost sales.”

28 held in the China Steel Association in 2009 the second group debate on the knowledge development, China Steel, manager vice head of the Association for Luo Bingsheng to refute the atop assertion, CVRD ore sales bang discount for each pay for, not a interim charge, is a long ADPL price. “(River Valley) that is not congenial, why not vanquish them tickets.”

T ian zhi ping deputy general manager of Hebei Iron & Steel Group, told this reporter that “we do not have to buy mine in the spot market, the Association bought mine are long, prices had fallen in 2008 than 20%.” Jia liang qun also said: “As far as I contact with steel, and no one is willing to re-price executive director of the Association, the price is too high out of the way, and indeed in the fight CVRD ore sales discount for each purchase! ”

Prices still contentious, but “iron ore discussion mechanism” change is inevitable.

Zhu said: “As the price index for emerging markets, such as the reasons for the expansion of the spot market, the new pricing has occurred.” Zhu stressed that the choice of CVRD benchmark price system.

In that case, the cost means in the discussions, the Chinese iron alloy enterprises the alternative of what?

Prior to that, Dragons Group made a “quarter of pricing” of the compromise form, to restore the preceding “long-Society” and “spot” cost of two. However, Luo Bingsheng said that the Chinese edge not ever increased any quarter charge form, charge is still adhering to the standard of the year.

Luo Bingsheng survivors worried that “China has no designs to stop the right to discuss the cost first,” “Japan, Europe and the United States and other nations to work out the rate of down turn, if not in conformity with the obligations of the Chinese edge, China will adhere to its values extend to negotiate,” he repeated that China’s cost base line is the “best 40 per hundred down to 50%.”

However, Zhu said: “40% of the descent is only a guess of the Chinese boundary, every one can make a guess, but in the end be reliant on the market speak.”

The future of China’s steel ore market demand, Zhu waited “very optimistic” stance, “the Chinese market has shown clear signals of recovery. I trust that the allotment of 4,5 months of deals to rise.”

China’s iron ore imports are indeed rising. China Steel Association statistics show that the first quarter of 2009, China imported iron ore 131.5253 million tons, an increase over the same period last year 20,861,100 tons, an increase of 18.85%; which, in March iron ore imports 52,080,200 tons, a record single-month record high imports than the increase in imports in March last year 16,398,000 tons, an increase of 45.96%.

Luo Bingsheng believe, “hopes to boost metal ore trades in China’s outlook, it is unrealistic to achieve.” He farther clarified that the first quarter of the metal ore trades far exceeded the demand for metal and iron alloy output, at present, the dock has built up almost 70 million tons of metal ore, iron alloy mills in China have been considerably reduced. Tian zhi ping furthermore disclosed that Hebei Iron and Steel has been re-cut by 10%.