China Iron and Steel Association won’t budge on iron ore price cuts
The secretary general of the China Iron and Steel Association said domestic steel manufacturers are anticipating a breakdown in iron ore contract negotiations.Shan Shanghua said China will not make concessions and will contribute to demand a 40%-45% reduction in annual contract prices.Shan told the China Securities Journal, "It’s impossible that China will allow miners to maintain high profit while its own mills are losing money."In case negotiations do collapse, Shan said China could turn to spot purchases as there is an oversupply in the iron ore market. In a worst-case scenario, China would rather cut steel production if supplies are affected.Vale, BHP Billiton and Rio Tinto have all reached agreements with individual Japanese and South Korean steel manufacturers. Shan said Japan is not representative of all Asian steelmakers in the price talk as that nation only account for one sixth the size of China’s imports. He said the Japanese could accept price cuts as many of them hold interests in Australian iron ore mines.