“Steel prices had plunged to the level of 1994. Winter is coming, indicating that spring is not too far away.” Qi Xiangdong, vice general secretary of China Iron and Steel Association (CISA) expressed.

Data from CISA shows that in Jan.-Nov., China produced 462.96 million tons of steel products, up 2.6pc over the same period last year, while the growth dropped back 14.1pc year-on-year. In Nov., China produced 35.9 million tons of steel products, down 4.97 million tons and 12.4pc from the same period last year.

Steel production showed unprecedented rapid decline in Sept.. In June this year, the daily steel production scored the historical high of 1.5648 million tons, equivalent to the annual production of 573 million tons. The daily steel production dropped to 1.3205 million tons in Sept., equivalent to the annual production of 482 million tons, while the average output fell to 1.1581 million tons in Oct., equivalent to that of 423 million tons a year. In Nov., the daily output plunged to 1.07 million tons, equivalent to that of 393 million tons per year.

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We are a Chinese buyer and are urgently looking for 500 MT Venezuela Iron Ores. The price and terms could be negotiated while previous shipping documents to China is required. Please reply me if you are a firm supplier.

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According to the investigation and analysis of operators and insiders, construction steel market of 2009 shows an air of expectancy, stabilization and slight fluctuation will be the essential characteristics.

This year, domestic construction steel market suffered shaken changes, prices continuously ascended and descended. In the first half of the year, the whole market warmed up in series, prices sharply soared, thereinto, prices of ┆6.5mm high-speed wire rod and ┆20mmケ deformed bar once respectively inclined to 5,850 yuan per ton and 5,535 yuan per ton, correspondingly boomed 1,350 yuan per to and 1,050 yuan per ton when compared to the end of 2007. However, when entering the second half of the year, the good situation suddenly turned, prices significantly descended and presented an irrigational sharp drop situation, while some ordinary deformed bar price plunged to 3,000 yuan per ton in October, showing a rare phenomenon.

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The global iron ore negotiation price-fixing system began in 1981 and it has been for 28 years till now. The benchmark price-fixing system was held in the fourth quarter every year, in which the world’s major iron ore suppliers made negotiations with other major customers to decide the next year’s iron ore FOB price, and if any one supplier reached the iron ore contract with steelmills, the others should accept the negotiation result.

Principles of traditional iron ore benchmark pricing system
Ⅰ. The price reached in the first round of negotiation will be accepted by the rest rounds of negotiation and became the standard price-fixing for the whole year, in which, buyers will not purchase from other sellers with higher price in the future negotiation and sellers will not sell to the buyers with cheaper price too.

Ⅱ. The same product variety only has one price rising standard, that is to say, they only set the price rising for the various varieties of products, not considering the different price rising for the different quality of the same variety. Every variety only has one price rising standard in the five- year straight negotiation from 2003 to 2007, with the exception of Vale’s BF pellet ores.

Ⅲ. Iron ore price was set by FOB price, not including ocean freight and other charges, for more visit: chinametalbiz.com

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China's first steel futures contract is expected to be launched on Shanghai Futures Exchange (SHFE) shortly after the 2009 Spring Festival, a source close to the bourse said.

The exchange will begin trading futures contracts on wire rod and rebar, which are the two biggest steel products in China in terms of consumption.

Industry insiders told China Daily that the draft contract specifications have been worked out and are soliciting opinions from industry experts.

Steelmakers and traders welcome the new contracts, which serve as an effective hedging tool to help minimize risks associated with price fluctuations in an increasingly uncertain market environment.

After the introduction of the new contract, SHFE will become the world's fourth exchange on which steel futures contracts can be traded. The other three exchanges that have opened steel futures trading are Multi Commodity Exchange of India, Central Japan Commodity Exchange and London Metal Exchange.

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Voestalpine announced that it has frozen the evaluation project for examination of a new steel site on the Black Sea.

The release said that the decision regarding the possible location has been deferred indefinitely in view of the recessive development anticipated in 2009 and beyond this the uncertainty for the cyclical trend for subsequent years.

Voestalpine said that “The four possible locations in Bulgaria, Romania, Turkey and Ukraine, which were identified during the evaluation project, will be examined again on reactivation of the project. The activities started during the course of securing a potential site in Constanta will be abandoned. These activities were started as it was not possible to secure the plot in any other manner due to the legal framework in Romania. As the decision has been postponed indefinitely securing of the land will not be pursued any further and the options acquired will not be exercised by voestalpine.”

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Karen Shi 86-21-50585368

In 2008 China’s steel market experienced both sharp rises steep falls. In the first half of the year, the steel market rose continuously and broke historical records, due to the following reasons:

- Snow storms occurred in January
- A temporary shortage of coke, and massive hike in iron ore contracted prices
- Production control during the Beijing Olympics
- Reconstruction in earthquake-stricken regions
- Weakening US dollar and spreading inflation all over the world
- Steel price surge at world export market
- Relaxing money supply in China’s home market. In the second half of the year, due to slowing demand, tightening money supply, the credit crunch, a steep drop in international commodity prices and the strengthening US dollar, China’s steel market nose-dived.

In 2009 China’s steel market will encounter slowing demand both internally and externally, and will present a general trend of “slow demand and low supply”. Please check SteelHome Annual Report

SteelHome 2008 Annual Report and Anticipation for 2009
http://en.steelhome.cn/n237493.html

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