Principal of domestic large-scaled steel mills’ iron ore sector revealed three ore miners have asked for an increase of 50%, which made steel industry in the state of low profit worried.
The aforesaid man said Rio Tinto proposed an increase of 50% from the long-term contract price of last year, while BHP Billiton hoped some steel mills to carry out spot index price and Vale required adding 50% based on the price difference between this year’s spot price and long-term contract price of last year.
Analyst of steel industry stated now China’ s steel manufacturers are very passive and they can only shift cost to downstream industries by lifting EXW price, but it is hard to forecast whether the market demand can successfully digest and improve.
The high spot price of iron ore also made the negotiation harmful for China’s steel mills. From Feb.26 to Mar.3, the price (CIF) of 63.5% Indian power ore peaked U.S.$140-142 per ton, hit 18-month record high.
The sales profit of steel industry slipped to 2.2% in 2009, down 53.4% year on year and the profit rate is less than a half of 5.47% of national industry profit margin. Wu Xichun, honorary president of CISA said enterprises may as well stop production on the low profit. He stated if iron ore price hikes again, China’s steel industry will face serious situation from the perspective of China’s overcapacity and huge inventory.
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