Steelmakers oppose iron ore proposals

Tag: steel billets

BHP Billiton's proposal to link annual contract prices for iron ore to a market-driven supply index rather than through negotiations between miners and mills is 'inappropriate and unfair,' the China Iron and Steel Association (CISA) said.

'As the three global iron ore giants (BHP, Rio Tinto and Vale) control over 70 pct of seaborne iron ore supply, using an index to set a market benchmark price will negate the demand-and-supply principle and diverge from the present real situation. This is inappropriate and unfair,' the association said in a statement on its website.

It suggested that Rio Tinto took the right course in settling iron ore prices through talks.

'Baosteel reached a negotiated settlement with Rio Tinto for the new contract price. This practice and system is mutually beneficial and should be preserved,' the CISA statement said.

'A price-index proposal isn't good for the development of a long-term and stable relationship between miners and steel mills, therefore we strongly object,' it added.

Baosteel, one of China's top steelmakers, agreed to pay 80-96 pct more for Rio Tinto's iron ore this year, higher than the 65-71 pct settled earlier with Brazil's Vale.

BHP announced earlier it was considering transferring its expiring contracts into an iron ore index, following the end of the previous contract year that ended on April 1.

BHP has yet to settle new contract prices with China, with the company reportedly holding out for a better deal than that secured by Rio Tinto.