China's largest steel company, Baosteel Group, is likely to conclude talks on iron ore prices this month, Monday's China Securities Journal reported, amid reports that Japan's Nippon Steel had agreed a 65-percent price rise with one of the three main suppliers.
Quoting Baosteel chairman Xu Lejiang, who declined to comment on the iron ore import price for 2008, the report gave no indication of the outcome of the talks.
However, it cited a source familiar with the negotiations as saying costs would rise by 65 percent over last year with details to be published on Monday or Tuesday.
Baosteel has been negotiating on behalf of China's steel industry since December last year with major global iron ore providers, including BHP Billiton, Rio Tinto and CVRD.
BHP Billiton, announced on Jan. 30 that it had signed a 10-year deal to supply Baosteel with an additional 94 million tons of iron ore.
In late 2006, Chinese steel makers agreed with major providers on a 9.5-percent price rise for iron ore imports for 2007. The lower-than-expected increase was deemed a success for Chinese buyers.
China, the world's largest steel producer and consumer, imported 383 million tons of iron ore in 2007, up 56.8 million tons or 17.4 percent year on year, according to the China Iron and Steel Association.
China is expected to eliminate 100 million tons of iron production capacity and 55 million tons of steel production capacity by 2010.
The association figures show that 55 percent of the imported iron ore in 2007 was for producing export-oriented steel products.
"Domestic demand growth for pig iron will probably drop from 14.11 percent in the second half of 2007 to 12 percent in 2008 and exports of iron and steel products by domestic manufacturers are expected to decrease by 20 million tons this year," said Luo Bingsheng, vice chairman of the association last month.
The Chinese Customs figures showed that the country's steel export stood at 4.14 million tons in January, down 5.4 percent year on year.