Wed, Dec 07, 2011 - Page 11 News List

China Steel Corp in talks to have Q1 iron ore prices cut

Staff Writer, with Agencies

China Steel Corp (CSC, 中鋼), the nation’s largest steelmaker, is in talks with the world’s major iron ore suppliers to cut prices amid declining demand.

CSC is negotiating with Vale SA and other producers, Hung Jui-bin (洪瑞彬), the company’s public relations officer, said by telephone after the Chinese-language Economic Daily News reported that CSC has joined with Baoshan Iron & Steel Co (寶鋼) and some other Chinese mills to seek a cut in iron ore prices.

CSC said last month it was actively seeking to defer or cut upcoming shipments of iron ore and coking coal from major suppliers to reduce costs.

VALE DEAL

A CSC official, who did not wish to be named, said yesterday that Vale agreed to slash its price of iron-ore shipments for delivery in the current quarter by between 20 percent and 25 percent.

The Brazilian miner agreed to price fourth-quarter shipments based on the Platts iron ore index in the fourth quarter, instead of using an average of the June-to-August period as previously agreed, which was higher, the official said.

According to a source with direct knowledge of the deal, CSC reached an agreement with Vale at the end of last month.

RIO NEXT?

The source, who asked not to be identified due to the sensitivity of the matter, said the company is expecting to reach an agreement with Rio Tinto Ltd later this month.

“With BHP Billiton Ltd, it will not be easy for them to agree any price cuts,” the source said.

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