Commodity Online
BEIJING: There is light at the end of the tunnel for negotiations between China Iron and Steel Association (CISA) and world’s leading iron ore producers over price fixing.

CISA, which leads China’s iron ore pricing negotiations with international mining companies, is reportedly thinking about softening its hardline stance on pricing.

Shanghai Securities News said that the CISA wanted to meet sellers half way when agreeing this year’s purchase price for iron ore.

China had been demanding foreign producers slash their price by between 40 and 45 per cent. CISA may now be prepared to pay a price some 33-40 per cent lower than last year.

Other news agencies reported that China may also be willing to accept a twice-per-year price-setting regime instead of a once-a-year system.

If such a new regime, which would better reflect short-term changes in demand and supply, were to be adopted, it would mark a key change in the decades-old annual pricing system between major miners and steelmakers.

Sellers and buyers will have to trade at spot market prices if they fail to reach an overall deal before the deadline at the end of June.

The CISA had initially said if prices did not fall by more than 40 per cent — taking it back to 2007 levels — China’s steel mills would not be able to make a profit.

Some researchers said China was likely to accept the Japanese benchmark price — the 33 per cent reduction on last year’s price — in order to secure long-term contracts.

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