COMPANY PRODUCT INQUIRY INFORMATION COMMUNITY NEWS Welcome to Wanjoo Metals       HOME > CUSTOMER CENTER > NEWS TITLE  China mills will resist Vale iron ore price hike WRITER   administrator DATE   2008-09-05 09:38:10 China mills will resist Vale iron ore price hike Friday September 5, 2008 SHANGHAI: Chinese steel mills yesterday prepared to rebuff top iron-ore miner Vale’s demand for an unprecedented price increase halfway through the annual contract cycle. Four steel industry sources confirmed yesterday a report that Vale had e-mailed Chinese customers a day earlier to say it would extend the 65%–71% price increase it agreed earlier this year by an additional 20 percentage points from Sept 1, effectively matching the rise won by its Australian rivals. The increase would also bring the loading price for iron ore paid by Asian mills into line with what Vale is charging its European customers. It has traditionally granted Asian mills a discount to make up for costlier shipping across the Pacific. Vale may believe that Chinese buyers can afford to pay more now that freight rates have nearly halved since June, but mills already burdened by surging raw material costs and weaker steel prices are not ready to give in without a fight. Workers at a steel plant and iron factory in Wuhan, capital of central China's Hubei province. - Reuters “We are not likely to accept the demand. Iron ore prices are easing these days in China and the 20 percentage point increase sounds like an unacceptable demand,” said another source at one of China’s largest steel mills. China’s top mill, Baosteel, which takes the lead in negotiating term ore prices for all Chinese mills, was consulting the government on an appropriate response after Vale approached it in mid-August, one industry source said. But their leverage is limited. One fifth of China’s ore imports are from Brazil, and its superior grades are coveted. “Vale’s strength is they sell super high quality ore. Anyone making high quality steel needs it to blend, and that leaves them in an extremely strong position,” an industry source said. Chinese mills declined any official comment on the demand. Japan’s Nippon Steel also declined to comment whether it had also been approached for a price increase. Vale had in February agreed on a price rise of 71% and 65% with its long-term Asian customers, depending on the grade of iron ore, for the year beginning April 1. But its deal was eclipsed by Australian rivals Rio Tinto and BHP Billiton, which wrung out bigger increases from Asian mills in later negotiations based on the added savings due to the shorter shipping distance. — Reuters [ L I S T ] WanJoo Metals All rights reserved. TEL : +82-2-585-2581, 2571,   FAX : +82-2-585-2587, 8799 FL.2 DaedeokPlaza Bldg, 206, Geumgok-Dong, Bundang-Gu, Seongnam-Si, Gyeonggi-Do 463-480, Korea