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Iron ore price negotiations likely to be done on quarterly basis

Iron ore price negotiations likely to be done on quarterly basis

Shanghai: According to Shan Shanghua, secretary general of China Iron and Steel Assocation, who spoke at the China International Steel and Raw Materials Conference 2008 the existing annual iron ore negotiation system seems outdated and is likely to be altered to a quarterly one, given the volatile commodity pricing environment. He noted in the conference that CISA will work to fix one price for all imported ore resources in the coming ore talks, to replace the current system where big gaps exist between long-term contracts and spot prices. He added that in Japan, there is no terms of so-called spot and contract prices and all orders adopt a unified price, while in China, not only spot and contract prices are different, but contract prices are not always the same. CISA will seek to uniform all prices for imported ore, no matter where it comes from, Australia, Brazil or India.
Mr Shan said iron ore was finally back to being a buyer's market. Some domestic miners have put more investment in ore and capacity in this sector has started building up at home. He said that Chinese steel makers are operating smoothly with home-supplied resource after ceasing importing ore from Vale. China will continue to ramp up domestic ore production. Mr Shan also noted how the whole steel industry has been plunged into the red this month, something that will lead to further consolidation among Chinese mills. [28/10/08]

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