It is reported that Wuhan Iron and Steel Co has signed a one year iron ore supply contract with Venezuela and the prices is lower than that settled between Japan and South Korea mills with Vale and therefore is referred as Chinese prices by media..

According to the estimation of Wuhan Iron and Steel Co this “Chinese Price” can reduce the cost of iron ore imported from Venezuela by at least 400 million Yuan. But, Mr Xu Xiangchun the Consulting Director of Mysteel stated that it is only an individual case, which cannot affect the negotiation between Chinese steelmaker and big three ore giants.

Mr Xu said that Chinese imported 600 million tonnes iron on per annum, of which the importation from Venezuela is no more than 3 million tones. The big three ore giants still own more than 70% of global iron ore supply and. China will continue to be in weak position in iron ore supply and-demand negotiation as long as the dependence of imported iron ore remains high.

Some experts said that steel mills negotiated the price with supplier themselves, because the recent volatility of iron ore price, but once the spot price drops below the contract price, the contract will be not able to carry out completely.

(Sourced from MySteel.net)
Visit www.Mysteel.net for real time access to China steel news!