Big three iron ore price increase 50% to situation of China's steel prices worrying

The source said that Rio Tinto iron ore this year,demand is strong, over the years of iron ore
made a long association bid was 50 percent highernegotiations on China's steel industry has always been
than last year's request, and BHP Billiton hopes forin a passive position, there is no right to speak. The
some steel mills to implement the spot index price,soaring price of iron ore to Chinese steel prices has
Vale requires spot prices this year and last year'sbrought a heavy cost burden.
price of a long association difference on the basis ofIn 2008, because of the iron ore spot prices under
a further price rise 50 percent requirement.the hype of all parties are constantly rising, but to
"Baosteel will certainly not ahead of Japan and Southaccept China's steel prices by almost 80% of the
Korea steel prices to accept a 50% price rise, orlong co-price gains. Two months later, the financial
certainly lead to condemning the one, and now steelcrisis broke out, iron ore spot prices fall, domestic
prices generally low profitability, 50% of the priceand international steel prices also fell after another,
increase pressure for us," the source said. "But ifresulting in 2008 China's steel industry, industry-wide
Japan and South Korea first accepted this price, welosses.
can only forced to accept, because the mines couldIn 2009, the financial crisis, has a long association
not supply, but the steel can not be cut."price down 33%, but because of China Steel
"My steel net" analyst Xu Xiangchun, said China's steelAssociation adhere to a higher discount, no
prices are now very passive, only by raising prices toagreement between the price, thus turned to the
shift costs to the downstream, but the marketspot market, China's steel prices, or privately with
demand can be smoothly absorb up, not a goodthe signing of 33% of the three mines The so-called
prediction.interim agreement discount prices.
He pointed out that steel inventories are still too high.2009 iron and steel industry sales profit margin fell to
February 22, in 26 large and medium cities, the main2.2%, down 53.4%, China's industrial profit margins
steel products of up to 15.68 million tons of socialless than half of 5.47%. China Steel Association
stock, up 51% over the same period last year.honorary president of the Wu Xichun said: "With such
The high iron ore spot prices of iron ore negotiationsa low profit margin, companies might as well not to
also made the situation even more detrimental toproduce, direct deposit bank enjoying the interest on
China's steel enterprises. Starting from the last Fridaythe cash." If the iron ore will rise again, the present
until yesterday, grade 63.5% Indian fine ore to shoredomestic overcapacity, high inventory the status quo,
up quotes 140-142 U.S. dollars / ton, the highest inin 2010 China's steel industry will face even more
nearly 18 months since a new high.severe situation.
As China's steel industry concentration is low, iron ore