China steel group opposes iron ore price index

June 30, 2008

June 30th (Business Spectator) – The China Iron and Steel Association opposes efforts by BHP Billiton to determine international iron ore prices with a price index, an official newspaper has said.

The association, which represents steel mills that produce about 80 per cent of the Chinese crude steel output, supports the deal between Baosteel and Rio Tinto as it maintained the current pricing system, the China Securities Journal said, citing an unidentified association executive.

Australian miner Rio Tinto last week clinched a hike of 96.5 per cent for lump ores and 79.88 percent for fines with China’s largest steel mill Baosteel.

But BHP has yet to settle, saying it wants more transparent pricing than the traditional benchmark system allows.

“Using an iron ore index to determine a market benchmark price disagrees with the principles of demand and supply and will be divorced from the current iron ore seaborne trade reality, and will be improper and unfair,” the newspaper quoted the executive as saying.

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