China Shanxi Mills Ink Iron Ore Deals With Major Miners-Reports
June 19 2009 - 2:44AM
Dow Jones News
Steel mills in China's Shanxi province have signed iron ore
supply contracts with global miners Vale S.A. (VALE), Rio Tinto PLC
(RTP) and BHP Billiton Ltd. (BHP), Shanxi media reported this
week.
The development underscores the weak clout the China Iron and
Steel Association enjoys, as it had earlier forbidden all mills
from independently negotiating supply deals with miners.
The Shanxi deals follow reports Vale had signed contracts with
38 smaller, privately owned mills for contracts involving some 50
million metric tons of ore shipments. It is unclear if the Shanxi
deals were part of this settlement.
Reports from the Southern Metropolis Daily and Shanxi Youth
newspapers said "many" mills were involved.
"We have contracts with the three big miners, and our steel
products are already made using long-term ore," a Shanxi mill
official was quoted as saying.
Shanxi Iron and Steel Association Secretary-General Zhu
Fengliang was quoted as confirming some steel mills had already
signed 2009 contracts.
"But the price hasn't been reported because it involves
commercial secrets," he said.
Zhu couldn't be reached for comment Friday.
The mills involved were described as small and mid-sized. The
reports said some of them have an annual production volume of 1
million tons and above.
Despite miners' settlements with Japanese, Korean and Taiwanese
mills this month, the CISA still hasn't arrived at a benchmark
price for this year.
It is holding out for cuts of 40% or more from last year's
benchmark iron ore price, which global miners have rejected.
-By Chuin-Wei Yap, Dow Jones Newswires; 8610 6588 5848;
chuin-wei.yap@dowjones.com