Iron ore price negotiations – CISA explains reasons for hike

July 22, 2008

July 22nd (Steel Guru) – According to China Iron and Steel Association, two factors neglected by the Chinese side during the China and Australia iron ore price negotiations partially contributed to the iron core’s price hike in 2008.

Mr Luo Bingsheng vice chairman of CISA said that China experienced a rush import of iron ore with a fake demand. He said that “From January to May of this year the domestic production of iron ore increased 25%. After meeting the surge in industrial demand of 8.4%, there’s still a surplus supply of iron ore available domestically.”

He added that rising demand could have been covered through domestic iron ore production alone.

Mr Luo Bingsheng said Baosteel had not expected Rio Tinto to increase its iron ore price so dramatically. He said that “In rejecting the acquisition bid from its rival BHP Billiton, Rio Tinto increased its iron ore price substantially, therefore raising its stock value.”

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