Iron ore contract-price talks continue
Chinese steelmakers and miners fail to meet deadline
Tom Stundza -- Purchasing, 7/1/2009 2:10:48 PM
China's steel industry failed to reach a supply deal with the world's major iron-ore producers by Tuesday's deadline. Yet, published reports from the region say the Chinese steelmakers appear to want iron ore price talks with Australian miners to continue.
As reported earlier, big steel makers in Japan, South Korea and Taiwan signed up to a new benchmark price at a 33% discount to last year's pricing levels. But firms from China, the world's largest steel market, have been holding out for a better deal.
China's state-controlled Xinhua News Agency says talks are continuing with Rio Tinto, the lead negotiator for iron ore miners, even though the China Iron and Steel Association (CISA) failed to get its desired 40% reduction in iron ore prices.
Now that the negotiating deadline has passed, iron ore miners have the right to sell iron ore at spot prices, which currently are higher than the benchmark rate. Spot prices are volatile, however, and Rio Tinto has said it's not a preferred method for sales. On the other hand, BHP Billiton, another large Australian iron ore miner, has no opposition to selling at spot, or index, prices.
See also: China says Rio-BHP iron ore joint venture may be a monopoly.
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