Iron ore price talks between Chinese steelmakers, the world’s largest buyers, and suppliers are beset by differences, said Angang Steel Co.
Suppliers cut exports to China during talks earlier, Zhang Xiaogang, the chairman of the biggest Chinese steelmaker traded in Hong Kong, said at a briefing in the city today. Mining companies are seeking to replace annual contracts with quarterly ones, a move opposed by Chinese mills, he said.
The World Steel Association called on authorities globally to examine the iron ore market after Brazil’s Vale SA broke with a 40-year custom of selling on annual contracts and won a 90 percent price increase from Japanese mills. The Chinese government last week said it was investigating the possibility that BHP Billiton Ltd., Rio Tinto Group and Vale may be monopolizing supplies of the steelmaking ingredient.
“They had been cutting their supplies to China earlier,” Zhang said. “That was a step they took as part of the negotiations.”
Vale, Rio and BHP account for about three-quarters of globally-traded seaborne iron ore. Steelmakers need to acquire mines to reduce their reliance, Zhang said, reiterating a call made by China’s commerce ministry last week.
Annual pricing crumbled last year as steelmakers in China failed to agree to a rate with lead negotiator Rio, followed by BHP’s move to cut the proportion of ore sold using the system.
Angang Steel, part of Anben Steel Group, plans to raise capital spending by 19 percent to about 9.5 billion yuan ($1.4 billion) this year from 2009, company secretary Fu Jihui said at the same conference. The company has enough capital to cover operations, and doesn’t plan to sell equity, Fu said.
Orders and export demand for steel are improving this year, Vice Chairman Chen Ming also said today.
To contact the reporter on this story: Mark Lee Wai Yee in Hong Kong at firstname.lastname@example.org