October 08, 2008

CISA worried about tougher benchmark iron ore talks

It is reported that the new round of benchmark iron ore price talks would initiate after the week long Chinese national holiday this year, different from in past years when it often started from end of November 2007 and will be shortened to one month from several months in duration.

Mr Luo Bingsheng deputy director of CISA for the first time noted to public that the 2008 fiscal iron ore price is facing upward pressure though the global ocean trading of iron ore will stand in balance at large. For China, the negotiation could be tougher.

According to Mr Liu Yongshun, chief of Chinese negotiation delegation and CEO with Hong Kong Asia Pacific Resource Company Ltd, this year's ore trading will still tip in favor of sellers, as domestic ore mines maybe hard to suffice steel makers' development, plus the exchange rate change, China is likely to step up reliance on imports.

In view of increasing import and the top three iron ore miners monopolizing the market with holding over 70% of resource, the consumers would stand at the inferior position. Meanwhile, a host of investment banks have revised upward their forecast. UBS has increased the estimate up to 25% rise Macquire looks for 17.5% or higher increase while Citi group caps their forecast in the range of 10% to 20%. Some analysts have even forecasted increase of 30% to 40%.

(Sourced from Mysteel.net)