For a rise of 80%-90% in iron ore price mentioned by three iron ore giants, China’s steelmills hope that iron ore producers can hold far-reaching insight . Deng Qilin, president of CISA, general manager of WISCO, said that accepting the unreasonable high iron ore price, steelmakers will go to extreme. Iron ore producers should not make the excessive profit, while steelmakers make no profit.

As largest iron ore buyer, China contributes to a large amount of profit for iron ore, but China faces the living pressure from the increasing iron ore price. CISA’s data on February 9 showed that in 2009, 68 large and medium steel enterprises achieved the profit of 55.388bln yuan, down by 31.43% year on year. According to CISA’s statistics, the sales profitability of 72 large and medium steelmakers was 7.5% in 2007, while it declined to around 5% in 2008, and even it slipped to 2.8% in 2009.

Quite different from it, three iron ore giants made huge profit. Rio Tinto’s net profit increased by 33% year on year to U.S.$4.78bln; BHP Billiton’s net profit in the second half of 2009 soared by 134% to U.S.$6.1bln; Vale’s profit in the fourth quarter of 2009 climbed by 15% to U.S.$1.57bln.

The long-term cooperation concept built by miners and steel enterprises has been gradually replaced by the short-term sudden huge profit. However, a considerable increase in iron ore offer will make iron ore suppliers become the final loser. Experts pointed out that from the viewpoint of the global iron ore supply layout, iron ore resource is not rare. The iron ore price maintains high price for long time, which is bound to force steelmakers to seek for other resource supply channels to reduce their dependence on three ore giants. And therefore iron ore producers should quit the sentiment of making the sudden huge profit and hold the far-reaching insight to deal with iron ore pricing system.

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

For a rise of 80%-90% in iron ore price mentioned by three iron ore giants, China’s steelmills hope that iron ore producers can hold far-reaching insight . Deng Qilin, president of CISA, general manager of WISCO, said that accepting the unreasonable high iron ore price, steelmakers will go to extreme. Iron ore producers should not make the excessive profit, while steelmakers make no profit.

As largest iron ore buyer, China contributes to a large amount of profit for iron ore, but China faces the living pressure from the increasing iron ore price. CISA’s data on February 9 showed that in 2009, 68 large and medium steel enterprises achieved the profit of 55.388bln yuan, down by 31.43% year on year. According to CISA’s statistics, the sales profitability of 72 large and medium steelmakers was 7.5% in 2007, while it declined to around 5% in 2008, and even it slipped to 2.8% in 2009.

Quite different from it, three iron ore giants made huge profit. Rio Tinto’s net profit increased by 33% year on year to U.S.$4.78bln; BHP Billiton’s net profit in the second half of 2009 soared by 134% to U.S.$6.1bln; Vale’s profit in the fourth quarter of 2009 climbed by 15% to U.S.$1.57bln.

The long-term cooperation concept built by miners and steel enterprises has been gradually replaced by the short-term sudden huge profit. However, a considerable increase in iron ore offer will make iron ore suppliers become the final loser. Experts pointed out that from the viewpoint of the global iron ore supply layout, iron ore resource is not rare. The iron ore price maintains high price for long time, which is bound to force steelmakers to seek for other resource supply channels to reduce their dependence on three ore giants. And therefore iron ore producers should quit the sentiment of making the sudden huge profit and hold the far-reaching insight to deal with iron ore pricing system.

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

Tom Albanese, CEO of Rio Tinto told to reporters on March 22 that currently, Rio Tinto’s first task is to enhance the relationship with China and Rio Tinto embarks on building up the "long-term" cooperation relationship with China.

Albanese said the China will become an important part of world economy and China will also become one of their important markets.

Albanese especially stressed that Rio Tinto works on founding the "long-term" cooperation relation with China. The most important thing for Rio Tinto is to cooperate with China to look for more cooperation opportunities.

He pointed out that in the past five years, the revenue proportion from China market accounting for Rio Tinto’s total income significantly increases, reaching 29% in 2009. China market still continues growing, which make Rio Tinto aware of the importance of developing cooperation relation with China.

On March 19, Rio Tinto and Chinalco announced that both sides have signed understanding memorandum jointly developing Guinea iron ore mine. Rio Tinto plans that its annual production should reach 70mln tons.

Albanese also attended China Development Forum. He did not give any comment on "Hu Shitai" case.

When talking about China’s current investing climate, Albanese showed that mutual cooperation, mutual leverage, they will realize win-win. He added that they need more maturity, consensus and correct judgment.

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

Tom Albanese, CEO of Rio Tinto told to reporters on March 22 that currently, Rio Tinto’s first task is to enhance the relationship with China and Rio Tinto embarks on building up the "long-term" cooperation relationship with China.

Albanese said the China will become an important part of world economy and China will also become one of their important markets.

Albanese especially stressed that Rio Tinto works on founding the "long-term" cooperation relation with China. The most important thing for Rio Tinto is to cooperate with China to look for more cooperation opportunities.

He pointed out that in the past five years, the revenue proportion from China market accounting for Rio Tinto’s total income significantly increases, reaching 29% in 2009. China market still continues growing, which make Rio Tinto aware of the importance of developing cooperation relation with China.

On March 19, Rio Tinto and Chinalco announced that both sides have signed understanding memorandum jointly developing Guinea iron ore mine. Rio Tinto plans that its annual production should reach 70mln tons.

Albanese also attended China Development Forum. He did not give any comment on "Hu Shitai" case.

When talking about China’s current investing climate, Albanese showed that mutual cooperation, mutual leverage, they will realize win-win. He added that they need more maturity, consensus and correct judgment.

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

The traditional iron ore contract pricing system is going towards a crossing.

According to information on March 22, international ore miners including Brazil’s Vale, BHP Billion and Rio Tinto have concluded the initial agreement with Japan’s main steel producers, planning to replace short-term contract with the iron ore pricing system.

Although China Iron and Steel Association stated it has not received the related notice and refused to make any comment, analysts believed that the aforesaid information does not come from nowhere. In the beginning of March, Japan’s steelmills first announced to accept the quarterly pricing contract. As the steel-melting raw material like coking coal, the iron ore long-term system is facing the heavy pressure.

Quarterly pricing becomes the breakthrough exit.

In the beginning of March 2010, ore giant BHP Billiton declared that the company has arrived at the coking coal supply agreement with part clients from Europe, China, Japan and India, which is settled according to short-term pricing. Japan’s main steel enterprises also confirmed that in accordance with agreement, from April to June, BHP Billiton’s coking price will rise to U.S.$200 per ton, up by 55% than 2009 price.

It is learned that it is first time Japan’s steelmakers accepted the coking coal quarterly price. However, for international ore miners such as BHP Billion, they will enter more raw material fields. In terms of iron ore, BHP Billiton has always calls on to cancel annual long-term pricing system. In the beginning of 2010, BHP Billiton said that in the fourth quarter of 2009, the company sold out 46% of iron ore at the quarterly price, spot price, index price.

Analysts thought international ore miners probably start with Japan’s steelmills to launch the iron ore quarterly price. Japan’s steel products is high-end, whose ability of shifting cost is stronger. Their concern about steady iron ore supply is more than price, one person familiar with Japan’s steelmills.

China and Europe are cautious about quarterly price. Ministry of Commerce previously stated that they hopes to continue carrying out iron ore long-term price system and provides the trade support.

Iron ore “finance nature” further standouts.

If iron ore transaction is implemented according to quarterly price or close to spot market from 2010 on, for steelmills, it is a concern start, iron ore “finance nature” will gradually standouts.

In contrast with annual contract price, iron ore spot price is more vibrant. In the beginning of the fourth quarter of 2009, the domestic iron ore spot price stood at around U.S.$90 per ton. With the approaching of the new fiscal year long-term pricing starting date (April 1st), the price has increased to U.S.$150 per ton.

If iron ore transaction is carried out according to quarterly price, the future iron ore price will further tend to spot price and index price. To hedge the fluctuation risk of spot market, many steelmakers have to enter finance derivative market.

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

The traditional iron ore contract pricing system is going towards a crossing.

According to information on March 22, international ore miners including Brazil’s Vale, BHP Billion and Rio Tinto have concluded the initial agreement with Japan’s main steel producers, planning to replace short-term contract with the iron ore pricing system.

Although China Iron and Steel Association stated it has not received the related notice and refused to make any comment, analysts believed that the aforesaid information does not come from nowhere. In the beginning of March, Japan’s steelmills first announced to accept the quarterly pricing contract. As the steel-melting raw material like coking coal, the iron ore long-term system is facing the heavy pressure.

Quarterly pricing becomes the breakthrough exit.

In the beginning of March 2010, ore giant BHP Billiton declared that the company has arrived at the coking coal supply agreement with part clients from Europe, China, Japan and India, which is settled according to short-term pricing. Japan’s main steel enterprises also confirmed that in accordance with agreement, from April to June, BHP Billiton’s coking price will rise to U.S.$200 per ton, up by 55% than 2009 price.

It is learned that it is first time Japan’s steelmakers accepted the coking coal quarterly price. However, for international ore miners such as BHP Billion, they will enter more raw material fields. In terms of iron ore, BHP Billiton has always calls on to cancel annual long-term pricing system. In the beginning of 2010, BHP Billiton said that in the fourth quarter of 2009, the company sold out 46% of iron ore at the quarterly price, spot price, index price.

Analysts thought international ore miners probably start with Japan’s steelmills to launch the iron ore quarterly price. Japan’s steel products is high-end, whose ability of shifting cost is stronger. Their concern about steady iron ore supply is more than price, one person familiar with Japan’s steelmills.

China and Europe are cautious about quarterly price. Ministry of Commerce previously stated that they hopes to continue carrying out iron ore long-term price system and provides the trade support.

Iron ore “finance nature” further standouts.

If iron ore transaction is implemented according to quarterly price or close to spot market from 2010 on, for steelmills, it is a concern start, iron ore “finance nature” will gradually standouts.

In contrast with annual contract price, iron ore spot price is more vibrant. In the beginning of the fourth quarter of 2009, the domestic iron ore spot price stood at around U.S.$90 per ton. With the approaching of the new fiscal year long-term pricing starting date (April 1st), the price has increased to U.S.$150 per ton.

If iron ore transaction is carried out according to quarterly price, the future iron ore price will further tend to spot price and index price. To hedge the fluctuation risk of spot market, many steelmakers have to enter finance derivative market.

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

Currently, Shandong Iron and Steel Group (hereinafter called Shangang) joined hand with Xinwen Mining Group (hereinafter called Xin Mining signing the cooperative framework memorandum with Hong Kong Hongqiao Group, intending to jointly develop Brazil SAM iron ore project.

According to the framework memorandum, three sides made the initial consensus that Xin Mining is in charge of exploration and preparation, after the project formally operates, they will discuss the cooperative development details; after the exploration is completed, Shangang will raise capital to develop this project.

On March 29, reporters did not contact Shangang and Xin Mining, so they did not know capital input by these two companies.

Shangang is a large-scale steel enterprises integrated Jinan Iron and Steel, Laiwu Iron and Steel and other Shandong’s related enterprises, and Shangang is integrating Rizhao Iron and Steel, targeting to building up a refined steel production base with annual production of 20mln tons.

Shandong province is eager to obtain Brazil’s ore mine. In the beginning of March, Hongqiao Group bought aforesaid Brazil iron ore project, at the end of March, Shandong’s two enterprises inked the above-mentioned cooperative framework memorandum with Hongqiao Group.

Brazil SAM iron ore project holds 6.2bln tons of deposit, owned by South America’s VNN. In March 2010, Hongqiao Group purchased its exploration ore right, its project investment is estimated to reach U.S.$2.588bln, with the planned refined ore powder production of 25mln tons.

Hongqiao issued the statement that SAM is private company registered in Brazil, SAM and its related companies hold 94 exploration licenses. After Hongqiao acquires SAM, SAM and related companies’ exploration licenses will transferred to SAM.

Shangang’s subsidiaries highly reply on the imported iron ore. Signing the cooperative framework memorandum is of great significance to resolve Shandong’s short iron ore resource issue. This move reflects that Shangang aims at building up its own overseas iron ore supply site.

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

Currently, Shandong Iron and Steel Group (hereinafter called Shangang) joined hand with Xinwen Mining Group (hereinafter called Xin Mining signing the cooperative framework memorandum with Hong Kong Hongqiao Group, intending to jointly develop Brazil SAM iron ore project.

According to the framework memorandum, three sides made the initial consensus that Xin Mining is in charge of exploration and preparation, after the project formally operates, they will discuss the cooperative development details; after the exploration is completed, Shangang will raise capital to develop this project.

On March 29, reporters did not contact Shangang and Xin Mining, so they did not know capital input by these two companies.

Shangang is a large-scale steel enterprises integrated Jinan Iron and Steel, Laiwu Iron and Steel and other Shandong’s related enterprises, and Shangang is integrating Rizhao Iron and Steel, targeting to building up a refined steel production base with annual production of 20mln tons.

Shandong province is eager to obtain Brazil’s ore mine. In the beginning of March, Hongqiao Group bought aforesaid Brazil iron ore project, at the end of March, Shandong’s two enterprises inked the above-mentioned cooperative framework memorandum with Hongqiao Group.

Brazil SAM iron ore project holds 6.2bln tons of deposit, owned by South America’s VNN. In March 2010, Hongqiao Group purchased its exploration ore right, its project investment is estimated to reach U.S.$2.588bln, with the planned refined ore powder production of 25mln tons.

Hongqiao issued the statement that SAM is private company registered in Brazil, SAM and its related companies hold 94 exploration licenses. After Hongqiao acquires SAM, SAM and related companies’ exploration licenses will transferred to SAM.

Shangang’s subsidiaries highly reply on the imported iron ore. Signing the cooperative framework memorandum is of great significance to resolve Shandong’s short iron ore resource issue. This move reflects that Shangang aims at building up its own overseas iron ore supply site.

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

Jia Yinsong, inspector of Ministry of Industry and Information Technology’s raw material department strongly said that China’s market demand is the greatest bargaining chip facing the increasingly clear quarterly pricing mechanism, index pricing mechanism, and China still holds the bargaining chip of insisting on iron ore long-term contract price.

He stated that the three big ore miners’ performance actually forced downstream to develop substitutes. When iron ore price remains high level, domestic iron ore development expense will be significantly increased, from now on, China will greatly increase home-made ore and preferably use domestic ore.

Jia Yinsong said that he does not support the transaction of iron ore financial derivative products. He noted that in fact iron ore index is financial derivative, and the financial crisis is resulted from financial derivative products. He believed that once iron ore trade is carried out according to price index, the market will cook index in 2010, which will continue pushing up iron ore raw material price.

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

Jia Yinsong, inspector of Ministry of Industry and Information Technology’s raw material department strongly said that China’s market demand is the greatest bargaining chip facing the increasingly clear quarterly pricing mechanism, index pricing mechanism, and China still holds the bargaining chip of insisting on iron ore long-term contract price.

He stated that the three big ore miners’ performance actually forced downstream to develop substitutes. When iron ore price remains high level, domestic iron ore development expense will be significantly increased, from now on, China will greatly increase home-made ore and preferably use domestic ore.

Jia Yinsong said that he does not support the transaction of iron ore financial derivative products. He noted that in fact iron ore index is financial derivative, and the financial crisis is resulted from financial derivative products. He believed that once iron ore trade is carried out according to price index, the market will cook index in 2010, which will continue pushing up iron ore raw material price.

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