UPDATE: China Assoc Wants "Reasonable Solution" In Ore Talks
July 31 2009 - 1:01AM
Dow Jones News
Quashing speculation that a resolution was imminent or had been
secretly reached over troubled iron ore price talks between global
miners and China, a senior official of the China Iron and Steel
Association said Friday the talks were still ongoing.
China, the world's biggest iron ore importer, hopes annual iron
ore talks will reach a "reasonable solution," said Luo Bingsheng,
the association's vice chairman.
"We hope to get a win-win solution at this year's talks," Luo
told reporters at the association's quarterly press briefing.
Even as the association is locked in protracted negotiations
with global miners, it has sought to control the flow of China's
iron ore imports.
Luo said the association is reviewing the country's 112 import
licenses but denied market chatter that the government intends to
allow only around 10 such permits.
"I have not received any information, nor has anyone brought up
with me, this plan to cut import ore licenses to around 10
licenses," Luo said.
By controlling iron ore import licenses, the association also
aims to prevent ore from flowing to pollutive, obsolete mills,
aiding its effort to consolidate and clean up a large and
fragmented industry, Luo said.
Luo's comments reflect a broad-brushed sketch of the
association's views on the deficiencies of China's steel market; in
particular, the difficulties it faces in controlling iron ore
prices.
Instead of widely fluctuating spot market prices existing
alongside annual term prices, China's iron ore imports should be
settled at one unified price, Luo said, adding that he expects this
unified price to be reached via the annual negotiations.
"Having two prices causes speculation," he said.
Luo declined to comment on a statement Wednesday by BHP Billiton
Ltd. (BHP) saying the Anglo-Australian miner had made advances in
settling more of its contracts with a mix of index-linked and
quarterly pricing, saying he would not remark on developments in
the price talks.
China should also develop more local iron ore mines to meet its
rising demand, Luo said, noting that the country will need both
foreign and domestic iron ore to supply its fast-growing steel
industry.
The association is leading China in the price talks with Rio
Tinto PLC (RTP), BHP and Brazilian miner Vale SA (VALE), which have
broken down amid China's espionage and bribery charges against four
Rio Tinto employees.
-By Chuin-Wei Yap, Dow Jones Newswires; 8610 6588 5848;
chuin-wei.yap@dowjones.com