Baosteel announced on December 21 that the company’s products’ prices for January of 2010 reflected the price difference between the varied products. It is unreasonable to link the steel price adjustment with the iron ore negotiation. The price cycle of iron ore greatly differed with that of the steel products in the domestic steel mills, ultimately, the overall demand and supply situation in the global market determined the iron ore price. The steel enterprises’ profitability worldwide did not support ore price to go up in 2010.
Baosteel said the price cycle of iron ore greatly differed from that of steel prices in China’s steel firms. Till now, iron ore agreement prices were all settled with annual pricing and the price talks lasted for a half of year, which China’ s mainstream steel mills including Baosteel determined the prices with monthly pricing. It is unreasonable to link iron ore negotiation with the price adjustment of Baosteel. From the long run, the iron ore reserve is sufficient, while the demand will present time-phased character with the situation of the global economy. In the different phases, iron ore price will emerge ups and downs.
Baosteel considered that globally, steel enterprises’ profitability did not bolster iron ore price up next year. Under the situation of the falling capacity utilization rate and steel price as well as most steel firms are on the edge of losses, the increasing space of iron ore will be suppressed. Although China’s steel enterprises’ performance improved in Q2 of this year, the profitability is still instable from the whole year. If the iron ore price goes up further, more enterprises will suffer losses. International main iron ore suppliers should consider the relationships between downstream steel industries from the perspective of rationality, long term and win-win.
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