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18 March 2010 at 23:55 IST
China’s iron ore price talks head for disaster
BEIJING (Commodity Online): Like last year, China is again heading for a deadlock as far as iron ore price negotiations are concerned. Last year China demanded a huge price cut from global mining giants but had to abandon the talks midway.
This year China is trying to limit the hike in prices due to rise in input costs. In its website, China Iron and Steel Association (CISA) has stated that it is in agreement with the strong opposition of the European Confederation of Iron and Steel Industries (EUROFER) to the iron ore producers’ plans to increase iron ore prices by around 80-90 per cent.
Brazilian miner Vale is seeking to implement major increases in its spot prices for iron ore, which will also be to the detriment of the long-term benchmark price system. Vale has suggested a rise of over 90 per cent for Japanese steel enterprises.
Thus, the price of Brazilian ore in 2010 could climb up by 90-100 per cent compared with the 2009 price for Japan and South Korea.
Some large Chinese steel producers have already received notification of price increases from Vale.
Meanwhile, steel tycoon Lakshmi Mittal is trying to set up steel plants in India again. The company’s top executives have met officials of the unlisted Bhushan Power & Steel seeking a strategic stake in the company.
Christophe Cornier, a member on the board of the world’s largest steelmaker ArcelorMittal, and its chief technology officer Pierre Gugliermina were in New Delhi recently and met senior officials at Bhushan Power.
A report in India’s Economic Times said ArcelorMittal will gain access to a steel mill and some mining rights in Orissa — the state which has frustrated Mittal for more than five years shuffling files around — if it manages to get the stake. The negotiations need not necessarily lead to a transaction.
Bhushan Power & Steel, controlled by New Delhi-based Sanjay Singal, is different from the listed Bhushan Steel managed by sibling Neeraj Singal. Mittal, who won over the Spanish and French governments within a few months to buy Arcelor in 2006, is exasperated as his India plans, announced a year before that, to set up $20-billion mills in Orissa and Jharkhand, are crawling due to red-tapism.
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