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QINGDAO, Oct. 26 (Xinhuanet) -- China's iron and steel makers will face
another round of tough bargains to allay a possible hike in the global iron ore
price in 2006.
At an ongoing international seminar on iron ore in this port city of east
China's Shandong Province, 45 leadi
ng Chinese iron and steel makers feel a
strong pressure of the price hike imposed by the world's largest iron ore
suppliers, including CVRD from Brazil, Australian BHP and RioTinto, which
jointly dominate 70 percent of iron ore material on the world market.
Nelson Silva, chairman of the board of CVRD, said that the strong global
economy will continue to drive the demand for iron and steel, which will boost
the marine trade of iron ore.
The Brazilian supplier demands a 10 to 20 percent of rise in the 2006
global iron price.
The suppliers together hoisted the global iron ore price by 71.5 percent in
April, which was expected to raise Chinese iron and steel makers' import costs
by 20 to 30 billion yuan (2.5 to 3.75 billion US dollars) this year.
"China expects the 2006 global iron ore price to return to the level
previous to the dramatic price hike," Luo Bingsheng, deputy president of the
China Iron and Steel Association, said at the seminar.
However, although the country is the world's largest iron and steel maker
and the largest importer of iron ore, it has very a weak power to influence the
global iron ore price.
Huang Tianwen, president of the Sinosteel, said that the company has
enhanced joint steel production with Australian partners in China, which can
hopefully push for the price cut of iron ore.
He considered that the price for next year is likely to fluctuate by 5 to
10 percent up or down.
According to the China Iron and Steel Association, global iron ore supply
and demand will be basically balanced next year, or that the supply will even
surpass the demand.
"It is reasonable for the price to fall," it said in a recent report on
iron ore supply.
The report said that China had 10 million tons of surplus in the supply of
iron ore in the first eight months due to shrinking demand, which has resulted
in the implementation of the government's new policies to encourage the merger,
regrouping and closures of iron and steel firms.
China's steel makers have badly suffered from fluctuations in global steel
market prices. Production cost soared by 47 percent in 2004 and by another 15
percent in 2005. The high iron ore price lingering for another year will
exacerbate the plight, said Luo.
The price has become a sensitive topic, drawing 600 participants to the
seminar attended by delegates from Chinese, Japanese, European and US steel and
iron giants, far outnumbering the anticipated 400 people.
Luo said that China has 70 qualified iron ore importers, all of which have
become members of an iron ore import committee under the association. The
committee can regulate and coordinate imports so as to avoid unnecessary tumult
disturbing market price. Enditem
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