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China bucks Asian producer trend and rejects Rio Tinto ore price cuts

China bucks Asian producer trend and rejects Rio Tinto ore price cuts

Hanoi: Iron ore giant Rio Tinto has supplemented its successful negotiations with Japanese producer Nippon Steel with similar terms accepted by major Asian customers POSCO (South Korea) and Taiwanese steelmakers CSC and Dragon. The terms, for 2009 contracts, agree upon price cuts of about 33%. However Chinese steel producers have rejected the terms as being unfavourable.

In a statement on its website, the CISA said that "Chinese steel companies will not accept or follow the price cut" on the basis that it "does not represent the mutually-beneficial relationship between steel producers and iron ore suppliers." Instead, the association is insisting that prices for iron ore should drop down to 2007 levels - estimated to be 40% lower than 2008 prices.

Sam Walsh, Rio Tinto Iron Ore ceo said "Each year the pricing negotiations are tough and this year is no exception, although the situation is becoming clearer as more customers settle to the same terms. We continue to negotiate with our remaining customers, the bulk of whom are in China. We believe the settlements achieved to date demonstrate that customers appreciate the certainty of price and volume that the benchmark system ensures."  [01/06/09]