China’ s crude steel production rallied fast in the recent several months, while the net steel import has not changed apparently. The domestic steel market faces great pressure. In September, domestic steel index dropped dramatically, approaching to the lowest level in November last year. Industry experts warn that domestic steel enterprises should pay full attention to the demand and supply changes of the market, actively adjust the production and products structure to adapt to market demand.

Since this year, China’s steel production grew steadily. China’s crude steel output decreased 6.89% in H2, 2008, but the production amounted to 420mln tons in the first nine months this year, up 7.51% year on year. Thereinto, the daily output increased to 1.648mln tons in June from 1.329mln tons in Jan. and reached 1.69mln tons in September which inclined 32.97% from that in October last year, equivalent to 617mln tons of annual production. Luo Bingsheng, executive vice president of China Iron & Steel Association (CISA) believed that the steel enterprises and all departments should attach great importance to the fast growth.

The production increased, but the price presented down-trend. Data showed that since May this year, steel price rose and the price composite index reached 108.19 points in late August this year, but dropped to 102.65 points in September, which is basically in line with the lowest level of 102.3 points in November last year.

Industry insiders considered that the price drops directly attributed to the steel oversupply and the gloomy state of steel export. According to data from Customs, China exported crude steel of 16.723mln tons in the first nine months, down 98.3% year on year. However, owing to the falls of international steel price, China’s steel import surged. The import reached 18.09mln tons in the first nine months, up 36.6% year on year.

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China’ s crude steel production rallied fast in the recent several months, while the net steel import has not changed apparently. The domestic steel market faces great pressure. In September, domestic steel index dropped dramatically, approaching to the lowest level in November last year. Industry experts warn that domestic steel enterprises should pay full attention to the demand and supply changes of the market, actively adjust the production and products structure to adapt to market demand.

Since this year, China’s steel production grew steadily. China’s crude steel output decreased 6.89% in H2, 2008, but the production amounted to 420mln tons in the first nine months this year, up 7.51% year on year. Thereinto, the daily output increased to 1.648mln tons in June from 1.329mln tons in Jan. and reached 1.69mln tons in September which inclined 32.97% from that in October last year, equivalent to 617mln tons of annual production. Luo Bingsheng, executive vice president of China Iron & Steel Association (CISA) believed that the steel enterprises and all departments should attach great importance to the fast growth.

The production increased, but the price presented down-trend. Data showed that since May this year, steel price rose and the price composite index reached 108.19 points in late August this year, but dropped to 102.65 points in September, which is basically in line with the lowest level of 102.3 points in November last year.

Industry insiders considered that the price drops directly attributed to the steel oversupply and the gloomy state of steel export. According to data from Customs, China exported crude steel of 16.723mln tons in the first nine months, down 98.3% year on year. However, owing to the falls of international steel price, China’s steel import surged. The import reached 18.09mln tons in the first nine months, up 36.6% year on year.

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Insider learned the latest progress of the negotiation said that the global several mine firms required boosting 10%-25% for ore price next year based on the contract price of this year, which may increase the steel cost in auto, construction, home appliance and other commodity.

China consumed about 65% of global seaborne ore. Presently China is trying to suppress the price of iron ore and coal which are the main raw materials in steel-making.

However, the insider learned the latest progress of the negotiation between steel firms and BHP Billiton, Rio Tinto as well as Vale said that steel demand is rallying and the iron ore supply is tight, which indicated that price is bound to hike.

Both sides may ink agreement in April of 2010 and the iron ore price may boost to U.S.$70-75 per ton. The price of this year was about U.S.$65 per ton.

The price rising on the spot market is beneficial to mining enterprises. BHP Billiton was eager to sell iron ore on spot market. The enthusiasm of Rio Tinto and Vale is not so high, but the counter-emotion is also dropping. Steel manufacturers hope to lock cost by contract price in order to be affected by the price increase.

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Insider learned the latest progress of the negotiation said that the global several mine firms required boosting 10%-25% for ore price next year based on the contract price of this year, which may increase the steel cost in auto, construction, home appliance and other commodity.

China consumed about 65% of global seaborne ore. Presently China is trying to suppress the price of iron ore and coal which are the main raw materials in steel-making.

However, the insider learned the latest progress of the negotiation between steel firms and BHP Billiton, Rio Tinto as well as Vale said that steel demand is rallying and the iron ore supply is tight, which indicated that price is bound to hike.

Both sides may ink agreement in April of 2010 and the iron ore price may boost to U.S.$70-75 per ton. The price of this year was about U.S.$65 per ton.

The price rising on the spot market is beneficial to mining enterprises. BHP Billiton was eager to sell iron ore on spot market. The enthusiasm of Rio Tinto and Vale is not so high, but the counter-emotion is also dropping. Steel manufacturers hope to lock cost by contract price in order to be affected by the price increase.

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Industry insiders believed that iron ore market must stay competitive.

World Steel Association appealed competitive administration organizations to fully examine the joint venture enterprises of BHP Billiton and Rio Tinto.

Ian Christmas, general secretary of WSA representing global steel makers said that “the binding agreement signed by Rio Tinto and BHP Billiton recently much differs from the proposal raised in early this year. It has main risks in restraining competition and its controlling position in the world’s seaborne ore market will become more unfair than the existing unsatisfactory state. The JV will make three-giant monopoly be duopoly”.

He unveiled that “the competition made market stronger and brought efficiency. The competition between steel enterprises has led global steel market to be healthier and brought benefit for steel consumers, therefore, it has promoted steel consumption to rise overall”, adding “we believe that the JV enterprise may seriously damage the market, so we called for all relevant competitive and administration regulators to make a serious examination”.

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Industry insiders believed that iron ore market must stay competitive.

World Steel Association appealed competitive administration organizations to fully examine the joint venture enterprises of BHP Billiton and Rio Tinto.

Ian Christmas, general secretary of WSA representing global steel makers said that “the binding agreement signed by Rio Tinto and BHP Billiton recently much differs from the proposal raised in early this year. It has main risks in restraining competition and its controlling position in the world’s seaborne ore market will become more unfair than the existing unsatisfactory state. The JV will make three-giant monopoly be duopoly”.

He unveiled that “the competition made market stronger and brought efficiency. The competition between steel enterprises has led global steel market to be healthier and brought benefit for steel consumers, therefore, it has promoted steel consumption to rise overall”, adding “we believe that the JV enterprise may seriously damage the market, so we called for all relevant competitive and administration regulators to make a serious examination”.

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In the evening of November 8, Jigang and Laigang announced that “they are preparing for the assets restructuring, while both of them suspend trading from November 9 and Shandong Steel had purchase Rizhao Steel in September, which meant that the integration of Shandong Steel starts formally”.

Industry insiders forecasted that Shandong Steel may take after the restructuring mode of Hebei Steel, putting Jigang, Laigang and Rizhao Steel in one and Jigang is more likely to become the platform of the integration.

“The production line of Jigang and Laigang is similar and if the one is chose as platform of integration, the possibility of Jigang is larger with its stronger comprehensive strength”, a steel analyst said.

According to the data in Q3, the total assets of Jigang reached 28.8bln yuan, while Laigang was 16.2bln yuan accumulatively, additionally, the incomes of Jigang was at 18.7bln yuan in the first three quarters, while Laigang stood at 20bln yuan in the same period.

Besides, Jigang claimed a few days ago that it planned to issue less than 650mln stakes with 4.48 yuan per share for transforming the projects of converter and rolling mills.

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In the evening of November 8, Jigang and Laigang announced that “they are preparing for the assets restructuring, while both of them suspend trading from November 9 and Shandong Steel had purchase Rizhao Steel in September, which meant that the integration of Shandong Steel starts formally”.

Industry insiders forecasted that Shandong Steel may take after the restructuring mode of Hebei Steel, putting Jigang, Laigang and Rizhao Steel in one and Jigang is more likely to become the platform of the integration.

“The production line of Jigang and Laigang is similar and if the one is chose as platform of integration, the possibility of Jigang is larger with its stronger comprehensive strength”, a steel analyst said.

According to the data in Q3, the total assets of Jigang reached 28.8bln yuan, while Laigang was 16.2bln yuan accumulatively, additionally, the incomes of Jigang was at 18.7bln yuan in the first three quarters, while Laigang stood at 20bln yuan in the same period.

Besides, Jigang claimed a few days ago that it planned to issue less than 650mln stakes with 4.48 yuan per share for transforming the projects of converter and rolling mills.

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Once Rio Tinto and BHP Billiton succeed in establishing JV, they will monopolize the iron ore resource worldwide further. At the same time, steel enterprises will be in disadvantage position for speaking in the negotiation, especially China’s steel enterprises who have not shared stocks with Australian miners.

Although China Iron & Steel Association (CISA) had issued the negotiation strategy and Rio Tinto showed friendliness to China on November 2, CISA still seems to lag behind in the starting line of negotiation of 2010.

On November 10, source from iron ore spot market noted that with no signal of production cut in domestic steel industry and strong iron ore demand, the spot price of imported ore from India firstly recovered to U.S.$100 per ton since mid-August, which exceeded 27% from long-term contract price of 2009. As for the bad situation, Luo Bingsheng, vice president of CISA admitted publically that “the three ore mines are the important targets for China, but China is in disadvantage stance in the negotiation. Three ore mines monopolize iron ore supply highly, so they can take many ways to affect price, which China is in the state of scatter”.

In view of the current situation, industry insiders pointed out that China’s steel enterprises should seek for new breakthrough just like last year. The latest data from Customs indicated that Australia, Brazil, India, South Africa and Ukraine became China’ s five largest importers in the first nine months this year, thereinto, the import increase from South Africa and Ukraine reached 144% and 91%, while it seems to ease China’ s dependence on the three ore mines. Analyst said that China can evade BHP and Rio’s strong attitude to seek breakthrough from Vale.

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Once Rio Tinto and BHP Billiton succeed in establishing JV, they will monopolize the iron ore resource worldwide further. At the same time, steel enterprises will be in disadvantage position for speaking in the negotiation, especially China’s steel enterprises who have not shared stocks with Australian miners.

Although China Iron & Steel Association (CISA) had issued the negotiation strategy and Rio Tinto showed friendliness to China on November 2, CISA still seems to lag behind in the starting line of negotiation of 2010.

On November 10, source from iron ore spot market noted that with no signal of production cut in domestic steel industry and strong iron ore demand, the spot price of imported ore from India firstly recovered to U.S.$100 per ton since mid-August, which exceeded 27% from long-term contract price of 2009. As for the bad situation, Luo Bingsheng, vice president of CISA admitted publically that “the three ore mines are the important targets for China, but China is in disadvantage stance in the negotiation. Three ore mines monopolize iron ore supply highly, so they can take many ways to affect price, which China is in the state of scatter”.

In view of the current situation, industry insiders pointed out that China’s steel enterprises should seek for new breakthrough just like last year. The latest data from Customs indicated that Australia, Brazil, India, South Africa and Ukraine became China’ s five largest importers in the first nine months this year, thereinto, the import increase from South Africa and Ukraine reached 144% and 91%, while it seems to ease China’ s dependence on the three ore mines. Analyst said that China can evade BHP and Rio’s strong attitude to seek breakthrough from Vale.

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Whether Steel Industry Adjustment and Restructuring or the Steel Industry Development Policy in revised stressed that steel capacity will shift to coastal regions. “it is a big trend”, Li Xinchuang, director of Planning and Research Institute Ministry of Metallurgical Industry told reporters.

With the historical reasons, most steel mills of China are located in cities presently and the layout is very unreasonable. Currently, the situation of oversupply is very serious in North of China and other mainland regions, while the coastal areas in the south with the booming demand are lack of production, which lead large quality of iron ore and steel to transport to and fro. The long-distance transportation not only added logistical cost, but also enhanced the contradiction of railway transport. Coupled with the pollution problems and urban expansion, it is the most urgent problem for steel enterprises to shift capacity to coastal areas.

The layout of Japan’s steel enterprises has a significant reference. The firms mainly lay in coastal regions and have great cost advantage in the obtaining of resource and energy, so the global competitiveness is very strong.

Therefore, Steel Industry Adjustment and Revitalizing proposed to promote the removal of urban steel mills to decrease environmental pollution. Till 2011, the capacity of steel enterprises along the sea will account for more than 40% of total production nationwide and the industrial layout is optimized apparently. The revising Steel Industry Development Policy also put forward that the unreasonable layout of steel industry will be improved till 2015 and the layout will be in line with the resource supply, transportation layout and market supply & demand in 2020.

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Whether Steel Industry Adjustment and Restructuring or the Steel Industry Development Policy in revised stressed that steel capacity will shift to coastal regions. “it is a big trend”, Li Xinchuang, director of Planning and Research Institute Ministry of Metallurgical Industry told reporters.

With the historical reasons, most steel mills of China are located in cities presently and the layout is very unreasonable. Currently, the situation of oversupply is very serious in North of China and other mainland regions, while the coastal areas in the south with the booming demand are lack of production, which lead large quality of iron ore and steel to transport to and fro. The long-distance transportation not only added logistical cost, but also enhanced the contradiction of railway transport. Coupled with the pollution problems and urban expansion, it is the most urgent problem for steel enterprises to shift capacity to coastal areas.

The layout of Japan’s steel enterprises has a significant reference. The firms mainly lay in coastal regions and have great cost advantage in the obtaining of resource and energy, so the global competitiveness is very strong.

Therefore, Steel Industry Adjustment and Revitalizing proposed to promote the removal of urban steel mills to decrease environmental pollution. Till 2011, the capacity of steel enterprises along the sea will account for more than 40% of total production nationwide and the industrial layout is optimized apparently. The revising Steel Industry Development Policy also put forward that the unreasonable layout of steel industry will be improved till 2015 and the layout will be in line with the resource supply, transportation layout and market supply & demand in 2020.

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Baosteel announced to adjust up most steel products for January of 2010 on December 10, a range of 300-600 yuan per ton. The price adjustment meant that the main products prices of Baosteel would be return back to the high levels of 2009. Baosteel regarded as price wide vane plays a dominant role in pricing.

It is worried that such price rising may stimulate steel mills to speed up production. At the same time, the increase of steel price will cause raw material prices such as iron ore and coking coal to ascend. Under the situation of the higher cost, if demand does not rally, the steel price is bound to drop and steel mills will face more serious state.

Steel mills seem to expect offset the increasing cost from higher negotiation price by adjustment. A senior industry insider said that on one hand, Baosteel negotiates as negotiation delegate, one the other hand, from the perspective of enterprises’ operation, it reduces enterprises’ risks by advancing steel price. Obviously, the conflictive way usually makes negotiation more difficult.

“Actually, such price adjustment intensified China’s disadvantage stance in the negotiation”, analysts said. He thought that China’s steel price should keep stable, which is beneficial to China in price talks. To increase price beforehand only makes China more passive in the negotiation”.

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Baosteel announced to adjust up most steel products for January of 2010 on December 10, a range of 300-600 yuan per ton. The price adjustment meant that the main products prices of Baosteel would be return back to the high levels of 2009. Baosteel regarded as price wide vane plays a dominant role in pricing.

It is worried that such price rising may stimulate steel mills to speed up production. At the same time, the increase of steel price will cause raw material prices such as iron ore and coking coal to ascend. Under the situation of the higher cost, if demand does not rally, the steel price is bound to drop and steel mills will face more serious state.

Steel mills seem to expect offset the increasing cost from higher negotiation price by adjustment. A senior industry insider said that on one hand, Baosteel negotiates as negotiation delegate, one the other hand, from the perspective of enterprises’ operation, it reduces enterprises’ risks by advancing steel price. Obviously, the conflictive way usually makes negotiation more difficult.

“Actually, such price adjustment intensified China’s disadvantage stance in the negotiation”, analysts said. He thought that China’s steel price should keep stable, which is beneficial to China in price talks. To increase price beforehand only makes China more passive in the negotiation”.

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Ma Guoqiang, general manager from Baosteel explained the company’s price lifting strategy in the interview on December 16. He said that “it is mainly determined by both sides of supply and demand and is in line with the recent market as well as the inventory”.

After price increase, large steel enterprises such as WISCO also raise its price. Some people argued that the chain price rising is not favorable for the elimination of excess capacity and the new round of iron ore price negotiation. Certainly the price increase affected the expectation of the iron ore suppliers to some extent, but as a listed company, Baosteel should consider the interests of shareholders rather than curb the price increase for iron ore negotiation. In fact, steel enterprises such as Baosteel take an optimistic attitude toward the demand in latter market and believe their stocks are in a normal level. Based on this, enterprises and some experts thought the steel price would present a rising tendency with stability.

Steel demand and the price will both change significantly in 2010. Till now, stocks of raw material and finished products in Baosteel are basically in a normal level.

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Ma Guoqiang, general manager from Baosteel explained the company’s price lifting strategy in the interview on December 16. He said that “it is mainly determined by both sides of supply and demand and is in line with the recent market as well as the inventory”.

After price increase, large steel enterprises such as WISCO also raise its price. Some people argued that the chain price rising is not favorable for the elimination of excess capacity and the new round of iron ore price negotiation. Certainly the price increase affected the expectation of the iron ore suppliers to some extent, but as a listed company, Baosteel should consider the interests of shareholders rather than curb the price increase for iron ore negotiation. In fact, steel enterprises such as Baosteel take an optimistic attitude toward the demand in latter market and believe their stocks are in a normal level. Based on this, enterprises and some experts thought the steel price would present a rising tendency with stability.

Steel demand and the price will both change significantly in 2010. Till now, stocks of raw material and finished products in Baosteel are basically in a normal level.

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According to the introduction of Shandong Steel (Shangang), the company established purchasing, sales, capital and operation as well as coordination centers recently and appointed leading members for the four centers.

Zou Zhongchen, chairman of Shangang said in a business integration conference that it is necessary for Shangang to carry out the integration of core business and critical resource. The establishment of four centers marked that Shangang’s business integration starts.

Zou said that the business restructuring aims at realizing synergistic effect and seeking for maximum benefit. Shangang targets for trial operation before the end of 2009 and official operation in 2010. The integration is not a simple business overlay or copy previous mode, it must ensure exerting great effect.

For Shangang, the core business integration will be a reform and creation of management systems, such as globalized purchasing strategy, scientific as well as standardized purchasing mode. Principals from Shangang said that the company will continue taking the low-cost strategy, seriously analyzing the keystone of cost reduction and profit improvement, and etc. trying to start the integration well and fast.

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According to the introduction of Shandong Steel (Shangang), the company established purchasing, sales, capital and operation as well as coordination centers recently and appointed leading members for the four centers.

Zou Zhongchen, chairman of Shangang said in a business integration conference that it is necessary for Shangang to carry out the integration of core business and critical resource. The establishment of four centers marked that Shangang’s business integration starts.

Zou said that the business restructuring aims at realizing synergistic effect and seeking for maximum benefit. Shangang targets for trial operation before the end of 2009 and official operation in 2010. The integration is not a simple business overlay or copy previous mode, it must ensure exerting great effect.

For Shangang, the core business integration will be a reform and creation of management systems, such as globalized purchasing strategy, scientific as well as standardized purchasing mode. Principals from Shangang said that the company will continue taking the low-cost strategy, seriously analyzing the keystone of cost reduction and profit improvement, and etc. trying to start the integration well and fast.

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Baosteel announced on December 21 that the company’s products’ prices for January of 2010 reflected the price difference between the varied products. It is unreasonable to link the steel price adjustment with the iron ore negotiation. The price cycle of iron ore greatly differed with that of the steel products in the domestic steel mills, ultimately, the overall demand and supply situation in the global market determined the iron ore price. The steel enterprises’ profitability worldwide did not support ore price to go up in 2010.

Baosteel said the price cycle of iron ore greatly differed from that of steel prices in China’s steel firms. Till now, iron ore agreement prices were all settled with annual pricing and the price talks lasted for a half of year, which China’ s mainstream steel mills including Baosteel determined the prices with monthly pricing. It is unreasonable to link iron ore negotiation with the price adjustment of Baosteel. From the long run, the iron ore reserve is sufficient, while the demand will present time-phased character with the situation of the global economy. In the different phases, iron ore price will emerge ups and downs.

Baosteel considered that globally, steel enterprises’ profitability did not bolster iron ore price up next year. Under the situation of the falling capacity utilization rate and steel price as well as most steel firms are on the edge of losses, the increasing space of iron ore will be suppressed. Although China’s steel enterprises’ performance improved in Q2 of this year, the profitability is still instable from the whole year. If the iron ore price goes up further, more enterprises will suffer losses. International main iron ore suppliers should consider the relationships between downstream steel industries from the perspective of rationality, long term and win-win.

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Baosteel announced on December 21 that the company’s products’ prices for January of 2010 reflected the price difference between the varied products. It is unreasonable to link the steel price adjustment with the iron ore negotiation. The price cycle of iron ore greatly differed with that of the steel products in the domestic steel mills, ultimately, the overall demand and supply situation in the global market determined the iron ore price. The steel enterprises’ profitability worldwide did not support ore price to go up in 2010.

Baosteel said the price cycle of iron ore greatly differed from that of steel prices in China’s steel firms. Till now, iron ore agreement prices were all settled with annual pricing and the price talks lasted for a half of year, which China’ s mainstream steel mills including Baosteel determined the prices with monthly pricing. It is unreasonable to link iron ore negotiation with the price adjustment of Baosteel. From the long run, the iron ore reserve is sufficient, while the demand will present time-phased character with the situation of the global economy. In the different phases, iron ore price will emerge ups and downs.

Baosteel considered that globally, steel enterprises’ profitability did not bolster iron ore price up next year. Under the situation of the falling capacity utilization rate and steel price as well as most steel firms are on the edge of losses, the increasing space of iron ore will be suppressed. Although China’s steel enterprises’ performance improved in Q2 of this year, the profitability is still instable from the whole year. If the iron ore price goes up further, more enterprises will suffer losses. International main iron ore suppliers should consider the relationships between downstream steel industries from the perspective of rationality, long term and win-win.

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WISCO’s “five-party agreement” and “China price” welcomed good news finally. On December 22, insiders of WISCO revealed that “China price” had been settled and Sun Wendong, general manager of WISCO’s international trade successfully ended the travel in Venezuela. However, he refused to disclose the other three parties of the “five-party agreement and the detailed iron ore price as well as the financing amount to Venezuela's Corporacion Venezolana de Guayana (CVG).

Reporters learned from the upper management of WISCO that except WISCO and CVG, China Development Bank (CDB) is another participant in the five-party agreement and plays a role in financing. In early December, CDB just reached financing cooperation agreement with WISCO, worth of 80bln yuan totally.

A senior expert from Development Research Center of the State Council said that “CDB should be the secret driving force in the agreement”, adding “WISCO achieves China price by financing CVG with the funds provided by CDB, whose role is similar to China Import and Export Bank which once financed Valin in purchasing FMG”.

However, the price is U.S.$40 per ton or U.S.$50 per ton, the implementing period is five years or ten years, which are all uncertain, the aforesaid insider of WISCO said the elaborated news may be released before Christmas Day.

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WISCO’s “five-party agreement” and “China price” welcomed good news finally. On December 22, insiders of WISCO revealed that “China price” had been settled and Sun Wendong, general manager of WISCO’s international trade successfully ended the travel in Venezuela. However, he refused to disclose the other three parties of the “five-party agreement and the detailed iron ore price as well as the financing amount to Venezuela's Corporacion Venezolana de Guayana (CVG).

Reporters learned from the upper management of WISCO that except WISCO and CVG, China Development Bank (CDB) is another participant in the five-party agreement and plays a role in financing. In early December, CDB just reached financing cooperation agreement with WISCO, worth of 80bln yuan totally.

A senior expert from Development Research Center of the State Council said that “CDB should be the secret driving force in the agreement”, adding “WISCO achieves China price by financing CVG with the funds provided by CDB, whose role is similar to China Import and Export Bank which once financed Valin in purchasing FMG”.

However, the price is U.S.$40 per ton or U.S.$50 per ton, the implementing period is five years or ten years, which are all uncertain, the aforesaid insider of WISCO said the elaborated news may be released before Christmas Day.

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On November 20, steel future and spot risks management senior was held by Shanghai future exchange in Hangzhou. It is learned that since the list of March 27, up to November 18, the steel future contracts reached 246mln hands accumulatively. Till the close of November 20, the accumulative contracts of steel futures broke 10trl yuan.

It is learned that the conference aimed at helping steel enterprises to build the sense of risks management, making firms initiatively and effectively use future market.

Huo Ruirong, vice general manager of Shanghai future exchange introduced the overall situation of steel future operation. Since the list on March 27, scale of steel future grew stably, price fluctuated moderately and the tendency closely linked with domestic capital market, steel spot price as well as steel index of Shanghai and Shenzhen stock market. Data showed that the relevance of future price was 0.9 before October and 0.93 after October.

With the gradual expansion of market scale and the increase of capitals, Shanghai future exchange has implemented a series of supervising measures and it will improve the current system to ensure the foundation of steel future market.

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On November 20, steel future and spot risks management senior was held by Shanghai future exchange in Hangzhou. It is learned that since the list of March 27, up to November 18, the steel future contracts reached 246mln hands accumulatively. Till the close of November 20, the accumulative contracts of steel futures broke 10trl yuan.

It is learned that the conference aimed at helping steel enterprises to build the sense of risks management, making firms initiatively and effectively use future market.

Huo Ruirong, vice general manager of Shanghai future exchange introduced the overall situation of steel future operation. Since the list on March 27, scale of steel future grew stably, price fluctuated moderately and the tendency closely linked with domestic capital market, steel spot price as well as steel index of Shanghai and Shenzhen stock market. Data showed that the relevance of future price was 0.9 before October and 0.93 after October.

With the gradual expansion of market scale and the increase of capitals, Shanghai future exchange has implemented a series of supervising measures and it will improve the current system to ensure the foundation of steel future market.

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Under the pressure of three ore giants lifting ore spot price, China began to speed up layout for negotiation. Well-informed personnel revealed that according with the steel industry’ s iron ore trade ore regulation issued in Feb. this year, CISA will release new added contents recently. It is learned that the supplement will tighten iron ore import standard, involving 70 steel enterprises and 42 traders with import licenses.

This move can control excessive import and prevent speculations, at the same time, it can help change the disadvantage position of China side in the negotiation.

The aforesaid personnel disclosed that the supplementary part will be finalized after the study of CISA and CCCMC, and then member meeting will be held. Once member enterprises vote through it, it will be firstly implemented in member enterprises.

Analysts said in the interview that the aforesaid supplement will help China to regulate market orders and build a fairer trade surrounding for domestic iron ore market. What is more, it can prevent excessive iron ore import and prevent three ore giants from controlling iron ore market order, and thus enhance China’ s speaking right in the negotiation.

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Under the pressure of three ore giants lifting ore spot price, China began to speed up layout for negotiation. Well-informed personnel revealed that according with the steel industry’ s iron ore trade ore regulation issued in Feb. this year, CISA will release new added contents recently. It is learned that the supplement will tighten iron ore import standard, involving 70 steel enterprises and 42 traders with import licenses.

This move can control excessive import and prevent speculations, at the same time, it can help change the disadvantage position of China side in the negotiation.

The aforesaid personnel disclosed that the supplementary part will be finalized after the study of CISA and CCCMC, and then member meeting will be held. Once member enterprises vote through it, it will be firstly implemented in member enterprises.

Analysts said in the interview that the aforesaid supplement will help China to regulate market orders and build a fairer trade surrounding for domestic iron ore market. What is more, it can prevent excessive iron ore import and prevent three ore giants from controlling iron ore market order, and thus enhance China’ s speaking right in the negotiation.

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Deng Qilin, general manager of WISCO revealed that the iron ore “China price” signed by WISCO and Venezuela's Corporacion Venezolana de Guayana (CVG) previously is lower U.S.$6.5 per ton than the market price, with the supply of 8mln tons annually. Presently according to the agreement inked by Rio Tinto and Nippon Steel in May of 2009, the benchmark price (FOB) of Australian ore for 2009 is U.S.$61 per ton.

Deng said in the phone interview that the long-term contract ore is a market behavior when the ore tightens, while now the iron ore stockpiles in the market, therefore, the long-term contract ore is no significance and a “China Price” should be set in the negotiation. Although the price talks with the three miners will be continuous, WISCO will also seek mines to develop in domestics or oversea by shareholding. “Iron ore must self-supply and must not depend on others”, he said. He believed that WISCO’s iron ore supply situation will change fundamentally.

Industry insiders considered that although the three miners are still strong in the iron ore market, China has made some breakthroughs in striving for pricing right of imported ore. By the two preparations of exploring new minerals in domestics and cooperating with many medium and small mines in oversea, China is expected to break the monopoly of international ore. Previously, Lei Pingxi, secretary general of Metallurgical Mines Association of China said that China’s domestic ore and oversea ore with equity will meet about 70% of raw material demand in steel-making in 2015.

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Deng Qilin, general manager of WISCO revealed that the iron ore “China price” signed by WISCO and Venezuela's Corporacion Venezolana de Guayana (CVG) previously is lower U.S.$6.5 per ton than the market price, with the supply of 8mln tons annually. Presently according to the agreement inked by Rio Tinto and Nippon Steel in May of 2009, the benchmark price (FOB) of Australian ore for 2009 is U.S.$61 per ton.

Deng said in the phone interview that the long-term contract ore is a market behavior when the ore tightens, while now the iron ore stockpiles in the market, therefore, the long-term contract ore is no significance and a “China Price” should be set in the negotiation. Although the price talks with the three miners will be continuous, WISCO will also seek mines to develop in domestics or oversea by shareholding. “Iron ore must self-supply and must not depend on others”, he said. He believed that WISCO’s iron ore supply situation will change fundamentally.

Industry insiders considered that although the three miners are still strong in the iron ore market, China has made some breakthroughs in striving for pricing right of imported ore. By the two preparations of exploring new minerals in domestics and cooperating with many medium and small mines in oversea, China is expected to break the monopoly of international ore. Previously, Lei Pingxi, secretary general of Metallurgical Mines Association of China said that China’s domestic ore and oversea ore with equity will meet about 70% of raw material demand in steel-making in 2015.

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India’ s government declared that from the early morning of December 25, the export duty on power ore was adjusted from zero to 5% and the lump ore was increased from 5% to 10%. Industry insiders believed that it will stimulate the spot price of Indian ore to China to soar.

Sharma, administrative secretary of the Federation of Indian Mineral Industry revealed that to increase export tariffs on iron ore is a wrong decision made by the government in the time of iron ore presenting rally and steel industry emerging recovery signals, added finance ministry should delay the time to levy export duty on iron ore export and wait the global steel enterprises fully remove the influence of the financial crisis. Indian mining ministry showed the dissatisfaction with the duty increase.

It is learned that as the three mining companies hardly supply ore on the spot market recently, China’ s steel mills turn eyes to India, which made the Indian ore increase fast. The 63.5% Indian ore price (CIF) of U.S.$120 per ton has been apparently higher than the spot price of 62% Australia ore, approaching to the spot offer of 65% Brazilian ore.

Insiders of steel enterprises considered that after Indian lifted export duty, the Indian spot price would be pushed up again, which will be a test for steel mills’ bearing strength, at the same time, iron ore negotiation will be in disadvantage stance. The price difference between Indian spot ore and Australian long-term contract ore to China’s ports has reached U.S.$40.

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India’ s government declared that from the early morning of December 25, the export duty on power ore was adjusted from zero to 5% and the lump ore was increased from 5% to 10%. Industry insiders believed that it will stimulate the spot price of Indian ore to China to soar.

Sharma, administrative secretary of the Federation of Indian Mineral Industry revealed that to increase export tariffs on iron ore is a wrong decision made by the government in the time of iron ore presenting rally and steel industry emerging recovery signals, added finance ministry should delay the time to levy export duty on iron ore export and wait the global steel enterprises fully remove the influence of the financial crisis. Indian mining ministry showed the dissatisfaction with the duty increase.

It is learned that as the three mining companies hardly supply ore on the spot market recently, China’ s steel mills turn eyes to India, which made the Indian ore increase fast. The 63.5% Indian ore price (CIF) of U.S.$120 per ton has been apparently higher than the spot price of 62% Australia ore, approaching to the spot offer of 65% Brazilian ore.

Insiders of steel enterprises considered that after Indian lifted export duty, the Indian spot price would be pushed up again, which will be a test for steel mills’ bearing strength, at the same time, iron ore negotiation will be in disadvantage stance. The price difference between Indian spot ore and Australian long-term contract ore to China’s ports has reached U.S.$40.

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At the beginning of the 2010, under the situation of several weeks’ increases, the iron ore spot price continued climbing, recorded high level. The price of 63.5% Indian power ore peaked U.S.$134 per ton, hiked more than one time since 2009. It is no doubt that the price rising of spot ore made China side tougher in the ore negotiation of 2010.

After the festival, the spot ore market presented larger increase. On January 4, 2010, the price of 63.5% Indian power ore was at U.S.$134 per ton and 62% PB power ore quoted U.S.$136 per ton at Tianjin port, at Qingdao port the price of 62% PB power ore was U.S.$136 per ton, 62% Indian power ore offered U.S.$130 per ton, 59% Indian power ore was U.S.$129 per ton, 65% Brazilian coarse power ore quoted U.S.$140 per ton and the price of 67% Brazilian iron ore fines was U.S.$146 per ton, while at Rizhao port, the price of 62% and 61% Indian power ore was U.S.$128 per ton and U.S.$124 per ton respectively.

Steel analyst of Guotai Junan Securities considered that the highest price surge on imported ore spot market since the 2009 was directly attributed to Indian government increased the ore export duty.

It is worth noting that opposite to the constant rising of spot ore, Baltic Dry Index (BDI) was closed at 3005 points on December 31 of 2009, recorded lowest since two months. The freight from Brazil to China was U.S.$27.091 per ton on December 30, down 14% from previous week and the transportation fare from West Australia to China ended with U.S.$11.046 per ton, down 10.6%.

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At the beginning of the 2010, under the situation of several weeks’ increases, the iron ore spot price continued climbing, recorded high level. The price of 63.5% Indian power ore peaked U.S.$134 per ton, hiked more than one time since 2009. It is no doubt that the price rising of spot ore made China side tougher in the ore negotiation of 2010.

After the festival, the spot ore market presented larger increase. On January 4, 2010, the price of 63.5% Indian power ore was at U.S.$134 per ton and 62% PB power ore quoted U.S.$136 per ton at Tianjin port, at Qingdao port the price of 62% PB power ore was U.S.$136 per ton, 62% Indian power ore offered U.S.$130 per ton, 59% Indian power ore was U.S.$129 per ton, 65% Brazilian coarse power ore quoted U.S.$140 per ton and the price of 67% Brazilian iron ore fines was U.S.$146 per ton, while at Rizhao port, the price of 62% and 61% Indian power ore was U.S.$128 per ton and U.S.$124 per ton respectively.

Steel analyst of Guotai Junan Securities considered that the highest price surge on imported ore spot market since the 2009 was directly attributed to Indian government increased the ore export duty.

It is worth noting that opposite to the constant rising of spot ore, Baltic Dry Index (BDI) was closed at 3005 points on December 31 of 2009, recorded lowest since two months. The freight from Brazil to China was U.S.$27.091 per ton on December 30, down 14% from previous week and the transportation fare from West Australia to China ended with U.S.$11.046 per ton, down 10.6%.

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It is reported that US Department of Commerce said on January 5 that it decided to levy anti-dumping tariffs on wire decking from China, ranging from 43%-289%, valued U.S.$300mln. US imported wire decking from China in 2008, worth of U.S.$317mln. In 2009, US carried out trade protection measures to China for several times. China has showed the dissatisfaction repeatedly, claimed the trade protection measures blocked the free trade.

According to the statistics, since Barack Obama took the post, obama administration had launched more than ten times of anti-dumping and anti-subsidy investigation on products from China. US International Trade Commission finally approved to impose about 10%-16% tariffs on oil pipes from China on December 30 of 2009, which is the largest trade sanction case for China till now. On December 29, USDOC also made a preliminary decision to levy 14%-145% anti-dumping duty on steel grating from China.

Principals of China Department of Commerce once said that US companies applied 12 protection applications on China’ s products, besides, China also suffered the US trade investigation for six times, valued U.S.$12bln totally.

Roach, chairman of Morgan Stanley Asia pointed out on January 4 that although the global economy presented recovery, there are many uncertain factors for the economic prospects and the rate of second recession in 2010 is about 40%. He said that the damage from the withdrawal of stimulus measures and the warm trade conflict as well as protectionism can make economic revival fragile.

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It is reported that US Department of Commerce said on January 5 that it decided to levy anti-dumping tariffs on wire decking from China, ranging from 43%-289%, valued U.S.$300mln. US imported wire decking from China in 2008, worth of U.S.$317mln. In 2009, US carried out trade protection measures to China for several times. China has showed the dissatisfaction repeatedly, claimed the trade protection measures blocked the free trade.

According to the statistics, since Barack Obama took the post, obama administration had launched more than ten times of anti-dumping and anti-subsidy investigation on products from China. US International Trade Commission finally approved to impose about 10%-16% tariffs on oil pipes from China on December 30 of 2009, which is the largest trade sanction case for China till now. On December 29, USDOC also made a preliminary decision to levy 14%-145% anti-dumping duty on steel grating from China.

Principals of China Department of Commerce once said that US companies applied 12 protection applications on China’ s products, besides, China also suffered the US trade investigation for six times, valued U.S.$12bln totally.

Roach, chairman of Morgan Stanley Asia pointed out on January 4 that although the global economy presented recovery, there are many uncertain factors for the economic prospects and the rate of second recession in 2010 is about 40%. He said that the damage from the withdrawal of stimulus measures and the warm trade conflict as well as protectionism can make economic revival fragile.

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It is reported that China Iron & Steel Association (CISA) released the steel price tendency analysis for 2009 as well as the market prospect for 2010 on January 22. According to the report, the global steel market will be better than 2009 with the gradual recovery of the global economy. However, as the state will issue policies such as resource tax reform and value acquisition for the mining, the cost price including domestic ore will increase further in 2010 and the steel price will be bolstered strongly.

CISA said that in the whole year of 2009, China’s steel price will fluctuate with low level. The domestic steel composite price index averages 103.12 points, down 33.54 points from 2009, a drop of 24.54%. From the average price of the main steel products, the heavy and medium plate as well as HR seamless steel pipe saw largest drop.

For the steel price tendency of 2010, the report pointed out that the global economy will gradually bottom out in 2010 and China’ s economy rally will be consolidated, therefore the steel market demand will outperform that in 2009, but the price will fluctuate. While as the higher raw material price, the steel price will be supported strongly.

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It is reported that China Iron & Steel Association (CISA) released the steel price tendency analysis for 2009 as well as the market prospect for 2010 on January 22. According to the report, the global steel market will be better than 2009 with the gradual recovery of the global economy. However, as the state will issue policies such as resource tax reform and value acquisition for the mining, the cost price including domestic ore will increase further in 2010 and the steel price will be bolstered strongly.

CISA said that in the whole year of 2009, China’s steel price will fluctuate with low level. The domestic steel composite price index averages 103.12 points, down 33.54 points from 2009, a drop of 24.54%. From the average price of the main steel products, the heavy and medium plate as well as HR seamless steel pipe saw largest drop.

For the steel price tendency of 2010, the report pointed out that the global economy will gradually bottom out in 2010 and China’ s economy rally will be consolidated, therefore the steel market demand will outperform that in 2009, but the price will fluctuate. While as the higher raw material price, the steel price will be supported strongly.

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The climbing iron ore spot price presents sluggish signal recently. On January 26, 63.5% of Indian power ore (CIF) quoted U.S.$129-132 per ton, fell from U.S.$135-137 in early last week. At the same time, iron ore inventories also continue rising at ports and the stockpile reached 67.42mln tons at domestic main ports till the close of last week, hit three-month high.

The callback of iron ore spot price is in the expectation of industry insiders. Last week, the price of main steel products fell significantly in domestic market and the construction steel price decreased more than 100 yuan per ton in most regions. Presently the social steel inventory is still high, which indicates the demand is not active in downstream industries. Analyst pointed out that under the situation of the limited profit of steel mills, the iron ore price can not hike endlessly.

Traders also responded that from external offer, the price of miners has also relaxed currently, while the actual transaction price is lower than the offer. Although producers are reluctant to adjust down the ore price, some individual makers have to sell at U.S.$125-126 per ton in order to reduce inventory before Spring Festival. Presently the raw material stockpile of most domestic steel mills all can maintain a period of time, from the current market price, manufacturers will make purchases cautiously, further, the market transaction will be light and port inventory will surge.

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The climbing iron ore spot price presents sluggish signal recently. On January 26, 63.5% of Indian power ore (CIF) quoted U.S.$129-132 per ton, fell from U.S.$135-137 in early last week. At the same time, iron ore inventories also continue rising at ports and the stockpile reached 67.42mln tons at domestic main ports till the close of last week, hit three-month high.

The callback of iron ore spot price is in the expectation of industry insiders. Last week, the price of main steel products fell significantly in domestic market and the construction steel price decreased more than 100 yuan per ton in most regions. Presently the social steel inventory is still high, which indicates the demand is not active in downstream industries. Analyst pointed out that under the situation of the limited profit of steel mills, the iron ore price can not hike endlessly.

Traders also responded that from external offer, the price of miners has also relaxed currently, while the actual transaction price is lower than the offer. Although producers are reluctant to adjust down the ore price, some individual makers have to sell at U.S.$125-126 per ton in order to reduce inventory before Spring Festival. Presently the raw material stockpile of most domestic steel mills all can maintain a period of time, from the current market price, manufacturers will make purchases cautiously, further, the market transaction will be light and port inventory will surge.

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It is reported that China five major metallurgical enterprises settled agreement with BHP Billiton, Rio Tinto and Vale on increasing iron ore price. According to this agreement, the ore price to China’s ports will rise from U.S. $62 per ton in 2009 to U.S. $84 per ton, a rising of 40%.

It seems to mean that the annual ore negotiation has achieved preliminary result. At least, there is a pricing standard. And the reporter learned from several domestic steel mills that presently the annual ore negotiation is still ongoing, while steelmakers and three ore miners both price temporarily and differently as China had not reached long-term price agreement with three miners last year.

"The iron ore negotiation is still ongoing led by Baosteel, and it is unlikely that three ore mining enterprises all agree the increase of 40%”, a senior executive from a steel enterprise with the steel production ranking top 10 in domestic market.

The aforesaid insider said compared with large-scaled steel enterprises, small and medium-sized firms are difficult to obtain long-term agreement ore, so the latter is easier to accept the temporary price proposed by mining enterprises as to exchange the guarantee of long-term agreement ore. After all, if mills purchase ore from spot market, the price will be higher over 40% than the initial price of Japan-S.Korea enterprises.

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It is reported that China five major metallurgical enterprises settled agreement with BHP Billiton, Rio Tinto and Vale on increasing iron ore price. According to this agreement, the ore price to China’s ports will rise from U.S. $62 per ton in 2009 to U.S. $84 per ton, a rising of 40%.

It seems to mean that the annual ore negotiation has achieved preliminary result. At least, there is a pricing standard. And the reporter learned from several domestic steel mills that presently the annual ore negotiation is still ongoing, while steelmakers and three ore miners both price temporarily and differently as China had not reached long-term price agreement with three miners last year.

"The iron ore negotiation is still ongoing led by Baosteel, and it is unlikely that three ore mining enterprises all agree the increase of 40%”, a senior executive from a steel enterprise with the steel production ranking top 10 in domestic market.

The aforesaid insider said compared with large-scaled steel enterprises, small and medium-sized firms are difficult to obtain long-term agreement ore, so the latter is easier to accept the temporary price proposed by mining enterprises as to exchange the guarantee of long-term agreement ore. After all, if mills purchase ore from spot market, the price will be higher over 40% than the initial price of Japan-S.Korea enterprises.

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The hanging iron ore negotiation just likes a dark cloud on the head of China’ s steel industry, but the market focus has not weakened. Recently news spread that China’ s steelmakers and oversea mining enterprises reached interim price agreement, the iron ore sales price to China’ s ports climbed 35% compared with 2009, from U.S.$62 per ton to U.S.$84 per ton. The new release caused the steel to weak generally on Feb.23 and more than two-thirds of shares ended with drops.

Foreign media reported that China’ s five major metallurgical enterprises inked interim price agreement with BHP Billiton, Rio Tinto and Vale, which increased iron ore price, that is, the iron ore sales price to China’ s ports will lift from U.S.$62 per ton last year to U.S.$84 per ton, an increase of 35%.

Analyst pointed out that on one hand, previously the long-term contract price inked by China’ s steel enterprises and miners was both FOB price, the CIF and FOB price has difference of sea freight and the so-called CIF price has no probability, on the other hand, the current price cannot referred as interim price.

Although the 35% price increase of iron ore has not recognized by domestics including steel enterprises, personages of all circles stated the controlled state of China’ s steel industry by oversea mining enterprises has not presented any changes and the negotiation of iron ore is still tough this year. The increase rate may not lower than 35%.

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The hanging iron ore negotiation just likes a dark cloud on the head of China’ s steel industry, but the market focus has not weakened. Recently news spread that China’ s steelmakers and oversea mining enterprises reached interim price agreement, the iron ore sales price to China’ s ports climbed 35% compared with 2009, from U.S.$62 per ton to U.S.$84 per ton. The new release caused the steel to weak generally on Feb.23 and more than two-thirds of shares ended with drops.

Foreign media reported that China’ s five major metallurgical enterprises inked interim price agreement with BHP Billiton, Rio Tinto and Vale, which increased iron ore price, that is, the iron ore sales price to China’ s ports will lift from U.S.$62 per ton last year to U.S.$84 per ton, an increase of 35%.

Analyst pointed out that on one hand, previously the long-term contract price inked by China’ s steel enterprises and miners was both FOB price, the CIF and FOB price has difference of sea freight and the so-called CIF price has no probability, on the other hand, the current price cannot referred as interim price.

Although the 35% price increase of iron ore has not recognized by domestics including steel enterprises, personages of all circles stated the controlled state of China’ s steel industry by oversea mining enterprises has not presented any changes and the negotiation of iron ore is still tough this year. The increase rate may not lower than 35%.

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Principal of domestic large-scaled steel mills’ iron ore sector revealed three ore miners have asked for an increase of 50%, which made steel industry in the state of low profit worried.

The aforesaid man said Rio Tinto proposed an increase of 50% from the long-term contract price of last year, while BHP Billiton hoped some steel mills to carry out spot index price and Vale required adding 50% based on the price difference between this year’s spot price and long-term contract price of last year.

Analyst of steel industry stated now China’ s steel manufacturers are very passive and they can only shift cost to downstream industries by lifting EXW price, but it is hard to forecast whether the market demand can successfully digest and improve.

The high spot price of iron ore also made the negotiation harmful for China’s steel mills. From Feb.26 to Mar.3, the price (CIF) of 63.5% Indian power ore peaked U.S.$140-142 per ton, hit 18-month record high.

The sales profit of steel industry slipped to 2.2% in 2009, down 53.4% year on year and the profit rate is less than a half of 5.47% of national industry profit margin. Wu Xichun, honorary president of CISA said enterprises may as well stop production on the low profit. He stated if iron ore price hikes again, China’s steel industry will face serious situation from the perspective of China’s overcapacity and huge inventory.

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Principal of domestic large-scaled steel mills’ iron ore sector revealed three ore miners have asked for an increase of 50%, which made steel industry in the state of low profit worried.

The aforesaid man said Rio Tinto proposed an increase of 50% from the long-term contract price of last year, while BHP Billiton hoped some steel mills to carry out spot index price and Vale required adding 50% based on the price difference between this year’s spot price and long-term contract price of last year.

Analyst of steel industry stated now China’ s steel manufacturers are very passive and they can only shift cost to downstream industries by lifting EXW price, but it is hard to forecast whether the market demand can successfully digest and improve.

The high spot price of iron ore also made the negotiation harmful for China’s steel mills. From Feb.26 to Mar.3, the price (CIF) of 63.5% Indian power ore peaked U.S.$140-142 per ton, hit 18-month record high.

The sales profit of steel industry slipped to 2.2% in 2009, down 53.4% year on year and the profit rate is less than a half of 5.47% of national industry profit margin. Wu Xichun, honorary president of CISA said enterprises may as well stop production on the low profit. He stated if iron ore price hikes again, China’s steel industry will face serious situation from the perspective of China’s overcapacity and huge inventory.

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Although iron ore price is not be settled yet, the latest information said that the 2010 iron ore price will not be implemented according to BHP Billiton’s mentioning price index, instead, China and global iron ore producers concluded the agreement on the implementing time of benchmark price, according to “China fiscal year”(from January 1 to December 31), the 2010 iron ore benchmark price is carried out. From the current situation, China’s saying right in iron ore price is still weak, the price of coking coal price also significantly increases.

On March 8, general manager of JP Morgan believed that China’s steel cost will rise by more than U.S.$300 per ton. In this circumstance, the profit margin of steel enterprises in 2010 will be re-shrunk.

The negotiation is not optimistic.

Analysts thought that even if part result is favorable to China, in iron ore negotiation, China is still passive. On the one hand, according to “China fiscal year” is not the core issue; on the other hand, unless its objective conditions are extremely advantageous, one side always makes the concession, the other side always gains the profit. This means that if the benchmark being implemented according to “China fiscal year” can be regard as the concession made by the opposite side, and then China will probably pay for it.

Currently, “index price” by BHP Billiton can be accepted, which is not a victory in the talk. As a matter of fact, “the transaction volume is confirmed, the transaction price depends on the market situation” is implemented, unless the iron ore spot price is lower than production cost, China’s steel enterprises will not achieve the profit only taking on risk. If so, the unfair proposal will be agreed on.

As of the final increase extent of 2010 iron ore long-term price, there is no optimistic news. Recently, it is reported that the increase extent in 2010 may range 60%-70%. Zhang Xiaogang, general manager of Ansteel Group said that 2010 iron ore negotiation situation is not optimistic, and the unexpected result may be turned out.

The other source stated that currently oversea three ore miners request an increase of 50%. Deng Qilin, president of WISCO Group noted that if iron ore price will increase by over 50%, beyond China’s steel industry cost, China’s steelmakers can’t afford.

The dual cost pressures

Insiders expressed that Baosteel will not accept a 50% rise before Japan and S. Korea’s steelmills, or it will be scolded by the domestic, because the current profit of steel enterprises is little, if they accept the increase extent, which creates huge pressure. On the other hand, if Japan and S. Korea accept, China’s steelmills have to accept.

General manager of JP Morgan hold that apart from an increase in benchmark price, China’s steel enterprises also face a considerable increase in the imported coking coal price.

She stated that 2010 coking coal contract price talk is under way, during the consultant between BHP Billiton and JFE Holdings, the 3-month coking coal price is increased by 55%, which is first time to price according to quarter. Affected by Australia’s wet weather, the railways are jammed, so the coking coal spot price has hiked to U.S.$220 per ton from U.S.$129 per ton of 2009 benchmark price.

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Although iron ore price is not be settled yet, the latest information said that the 2010 iron ore price will not be implemented according to BHP Billiton’s mentioning price index, instead, China and global iron ore producers concluded the agreement on the implementing time of benchmark price, according to “China fiscal year”(from January 1 to December 31), the 2010 iron ore benchmark price is carried out. From the current situation, China’s saying right in iron ore price is still weak, the price of coking coal price also significantly increases.

On March 8, general manager of JP Morgan believed that China’s steel cost will rise by more than U.S.$300 per ton. In this circumstance, the profit margin of steel enterprises in 2010 will be re-shrunk.

The negotiation is not optimistic.

Analysts thought that even if part result is favorable to China, in iron ore negotiation, China is still passive. On the one hand, according to “China fiscal year” is not the core issue; on the other hand, unless its objective conditions are extremely advantageous, one side always makes the concession, the other side always gains the profit. This means that if the benchmark being implemented according to “China fiscal year” can be regard as the concession made by the opposite side, and then China will probably pay for it.

Currently, “index price” by BHP Billiton can be accepted, which is not a victory in the talk. As a matter of fact, “the transaction volume is confirmed, the transaction price depends on the market situation” is implemented, unless the iron ore spot price is lower than production cost, China’s steel enterprises will not achieve the profit only taking on risk. If so, the unfair proposal will be agreed on.

As of the final increase extent of 2010 iron ore long-term price, there is no optimistic news. Recently, it is reported that the increase extent in 2010 may range 60%-70%. Zhang Xiaogang, general manager of Ansteel Group said that 2010 iron ore negotiation situation is not optimistic, and the unexpected result may be turned out.

The other source stated that currently oversea three ore miners request an increase of 50%. Deng Qilin, president of WISCO Group noted that if iron ore price will increase by over 50%, beyond China’s steel industry cost, China’s steelmakers can’t afford.

The dual cost pressures

Insiders expressed that Baosteel will not accept a 50% rise before Japan and S. Korea’s steelmills, or it will be scolded by the domestic, because the current profit of steel enterprises is little, if they accept the increase extent, which creates huge pressure. On the other hand, if Japan and S. Korea accept, China’s steelmills have to accept.

General manager of JP Morgan hold that apart from an increase in benchmark price, China’s steel enterprises also face a considerable increase in the imported coking coal price.

She stated that 2010 coking coal contract price talk is under way, during the consultant between BHP Billiton and JFE Holdings, the 3-month coking coal price is increased by 55%, which is first time to price according to quarter. Affected by Australia’s wet weather, the railways are jammed, so the coking coal spot price has hiked to U.S.$220 per ton from U.S.$129 per ton of 2009 benchmark price.

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In the meeting on the afternoon of March 10, Chang Zhenming, chairman of CITIC Pacific confirmed that the company has the intention of selling 65% shares of Shijiazhuang Iron and Steel, mainly developing another two special steel mills in the future.

Chang Zhenming said that Shigang is situated in the center of Shijiazhuang City, but it must be relocated to outside city due to city planning and environmental protection. So they decide to sell out 65% shares of Shigang, mainly developing Jiangsu Xingcheng Iron & Steel and Hubei Daye Special Steel.

However, its subsidiary, Xingcheng Iron & Steel and Hubei Daye Special Steel’s production in the following two years will expand into 9mln tons, exceeding 6.4mln tons of three special steelmills’ total output in 2009.

On March 4, it is reported that Hebei Iron & Steel discussed that CITIC planed to buy shares of Shigang. And then, the source said that CITIC’s holding 65% of Shigang will offer 1.9bln.

During one year Chang Zhenming on the position, CITIC Pacific achieved the net profit of HK$5.95bln in 2009, per-share profit for HK$1.63.

The company’s 2009 finance report showed that CITIC Pacific earned the revenue of HK$46.4bln, same as 2008, the net profit of CITIC Pacific stood at HK$5.95bln, better than the market expectation.

The favorable performance pushes up CITIC Pacific’s stock price to increase by 7.47% closing HK$18.98.

Three main businesses of CITIC made the profit in 2009; as of special steel, the profit plunged by 12.5% to HK$1.415, mainly caused by the sluggish demand in the first half of 2009; the iron ore exploration business turned losses into gains contributing to HK$376mln profit; the real estate contributed to HK$921mln profit.

Chang Zhenming stressed that the future developing directions of the company are special steel, iron ore exploit, the related upstream & downstream businesses and inland real estate.

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In the meeting on the afternoon of March 10, Chang Zhenming, chairman of CITIC Pacific confirmed that the company has the intention of selling 65% shares of Shijiazhuang Iron and Steel, mainly developing another two special steel mills in the future.

Chang Zhenming said that Shigang is situated in the center of Shijiazhuang City, but it must be relocated to outside city due to city planning and environmental protection. So they decide to sell out 65% shares of Shigang, mainly developing Jiangsu Xingcheng Iron & Steel and Hubei Daye Special Steel.

However, its subsidiary, Xingcheng Iron & Steel and Hubei Daye Special Steel’s production in the following two years will expand into 9mln tons, exceeding 6.4mln tons of three special steelmills’ total output in 2009.

On March 4, it is reported that Hebei Iron & Steel discussed that CITIC planed to buy shares of Shigang. And then, the source said that CITIC’s holding 65% of Shigang will offer 1.9bln.

During one year Chang Zhenming on the position, CITIC Pacific achieved the net profit of HK$5.95bln in 2009, per-share profit for HK$1.63.

The company’s 2009 finance report showed that CITIC Pacific earned the revenue of HK$46.4bln, same as 2008, the net profit of CITIC Pacific stood at HK$5.95bln, better than the market expectation.

The favorable performance pushes up CITIC Pacific’s stock price to increase by 7.47% closing HK$18.98.

Three main businesses of CITIC made the profit in 2009; as of special steel, the profit plunged by 12.5% to HK$1.415, mainly caused by the sluggish demand in the first half of 2009; the iron ore exploration business turned losses into gains contributing to HK$376mln profit; the real estate contributed to HK$921mln profit.

Chang Zhenming stressed that the future developing directions of the company are special steel, iron ore exploit, the related upstream & downstream businesses and inland real estate.

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Recently, reporters learned from the related departments that “12th Five-Year Plan” developing target submitted by WISCO showed that one steel group with an annual production capacity of 60mln tons will emerge.

The plan said that the main business scale of WISCO Group will reach above 60mln tons, among them, head office for 18mln-20mln tons, Egang for 5mln tons, Guangxi-Fangchenggang production base for over 10mln tons, Guangxi-Liugang for 8mln-10mln tons, Kungang for 8mln-10mln tons, Brazilian steelmaker for 5mln tons.

WISCO’s head office and Fangchenggang steel production base are positioned as world’s first-class steel production bases. Other enterprises are positioned as national first-class steel producers. By 2015, the income of steel main business will hit more than 300bln yuan, becoming the excellent and competitive top 500 enterprises, owning strong independent intellectual property right and core technology, entering world’s first-sixth steel enterprises and China’s first-third steelmakers.

The related revenue reaches over 130bln yuan, accounting for above 30% of the total incomes, and the earnings of employees double than “11th Five-Year Plan” period.

For more information please click: www.chinametalbiz.com ■

Recently, reporters learned from the related departments that “12th Five-Year Plan” developing target submitted by WISCO showed that one steel group with an annual production capacity of 60mln tons will emerge.

The plan said that the main business scale of WISCO Group will reach above 60mln tons, among them, head office for 18mln-20mln tons, Egang for 5mln tons, Guangxi-Fangchenggang production base for over 10mln tons, Guangxi-Liugang for 8mln-10mln tons, Kungang for 8mln-10mln tons, Brazilian steelmaker for 5mln tons.

WISCO’s head office and Fangchenggang steel production base are positioned as world’s first-class steel production bases. Other enterprises are positioned as national first-class steel producers. By 2015, the income of steel main business will hit more than 300bln yuan, becoming the excellent and competitive top 500 enterprises, owning strong independent intellectual property right and core technology, entering world’s first-sixth steel enterprises and China’s first-third steelmakers.

The related revenue reaches over 130bln yuan, accounting for above 30% of the total incomes, and the earnings of employees double than “11th Five-Year Plan” period.

For more information please click: www.chinametalbiz.com ■