Text Version
RSS Feeds
Newsletter
Home Forum Photos Features Newsletter Archive Employment
About US Help Site Map
SEARCH   About US FAQ Site Map Site News
  SERVICES
  -Text Version
  -RSS Feeds
  -Newsletter
  -News Archive
  -Give us feedback
  -Voices of Readers
  -Online community
  -China Biz info
  What's new
 -
 -
China seeks a new iron ore negotiation mechanism
+ -
15:59, August 19, 2009

 Related News
 Tough negotiations with ore giants to continue after FMG deal
 CISA: first iron ore "China price" is win-win
 Iron ore deal not a big deal
 Iron ore deal not a big deal
 Australian iron ore miner secures deal with China
 Comment  Tell A Friend
 Print Format  Save Article
On August 17, China's steel industry signed a high profile price cut agreement with Australia's Fortescue Metals Group Ltd (FMG), avoiding Rio Tinto and BHP Billiton. This shows China's intention to break the traditional negotiation model, so as to weaken the influence of the three iron ore giants. It also shows the willingness of the China Iron and Steel Association (CISA) to conduct negotiations and establish a pricing model based on a balance of interests.

Annual iron ore price negotiations date back to 1981. Following negotiations and consultation between iron ore suppliers and consumers, both sides jointly decide iron ore prices within the coming fiscal year. Over the years, three main iron ore suppliers have developed in the world: Australia's two giants, Rio Tinto and BHP Billiton, and Brazil's Companhia Vale do Rio Doce (CVRD).
 
It is a strange phenomenon that China's steel industry, a major buyer consuming over 90 percent of the incremental volume of iron ore in the international shipping market, has completely given pricing power to suppliers. It was not long ago that the Rio Tinto “spy-gate” incident exposed the tip of the iceberg.

The agreement with FMG has not only made market insiders reconsider the possibility of concluding an agreement with the three major iron ore suppliers, but also indicated that the CISA still prefers to reach long-term price agreements with suppliers.

The negotiation results publicly announced by the CISA has reminded the three major iron ore suppliers that reasonable prices should be established on the basis of a balance of each party's interests. This may promote the Chinese side and Rio Tinto as well as BHP Billiton to reach an agreement as soon as possible.

However, whether a result acceptable to both sides can be achieved still depends on the outcome of the game. The agreement between FMG and China also indicated that the future iron ore negotiation mechanism will be subtly changed. This will play a positive role in the transformation of both iron ore negotiations and the iron ore pricing mechanism.

By People's Daily Online



  Your Message:   Most Commented:
Being African among the curious Chinese
What does China contribute to the world?
Three Beijingers jailed in US. Spies again?
25-year-old Norwegian singer, Michael Jackson's 4th son?
What is beyond the physical Line?

|About Peopledaily.com.cn | Advertise on site | Contact us | Site map | Job offer|
Copyright by People's Daily Online, All Rights Reserved

http://english.people.com.cn/90001/90778/90857/90861/6733191.pdf