"Under the current supply and demand relationship, Chinese companies have no say in iron ore procurement and can only be forced to accept the prices proposed by the three major miners. Iron ore negotiations can only be suspended." The former China Steel Association Deputy Secretary-General Luo Bingsheng said in Beijing on February 23. Luo Bingsheng’s statement declared that the iron ore negotiation mechanism that has been in operation for more than 20 years has officially ended. This is also the official statement of the China Iron and Steel Association's first suspension of iron ore negotiations. Although Luo Bingsheng told reporters at the end of last year that the 2011 iron ore negotiations have been carried out, the outside world has been speculating that due to the unequal status of the supply and demand sides, China has no right to speak at all, and the negotiations are virtually ineffective. “Only after 2-3 years of iron ore supply and demand reversal, Chinese steel mills have reduced dependence on overseas iron ore, and it is only possible for Chinese steel mills and three major mines to return to the negotiating table.†Luo Bingsheng, February 21 Japan has just officially stepped down as the vice president of China Steel Association. Since 2003, he has served as the vice president of China Steel Association. At this time, it is the period of rapid development of China's steel industry. China's investment-driven economic development model has driven the rapid expansion of the steel industry. China's steel production capacity has increased from 100 million tons to more than 600 million tons. Due to the low grade of iron ore in China and the high cost of mining and selection, it can only rely on imports, resulting in a corresponding increase in iron ore imports to more than 600 million tons. According to the data provided by China Steel Association, China imported 628 million tons of iron ore in 2009, an increase of 42% over the previous year. With the elimination of backward production capacity and the control of new capacity, China’s iron ore imports in 2010 A small decline, but also more than 600 million tons. The iron ore price is the same as China's iron ore imports. In 2007, the average import price of imported iron ore was US$88.21/ton. By 2010, the average CIF price of imported iron ore has risen to US$128.38/ton. BHP Billiton's recently launched iron ore price in March reached US$168/ton. “The iron ore supplied by the three major mines accounts for 70% of the world market. In addition, several international investment banks are eager to see iron ore. The current international iron ore market has been completely monopolized by the three major miners. In addition, due to the existence of the domestic market. The two prices of Changxie and spot have caused the iron ore import order to be disordered, which has aggravated the fluctuation of iron ore prices.†The rising cost of iron ore has swallowed the profits of Chinese steel mills. “The steel mills will raise the price of steel every time. It was swallowed up by rising costs caused by rising iron ore prices," a steel industry expert told reporters. According to the China Steel Association data, in 2010, the member companies of the Iron and Steel Association with financial statements produced 515.33 million tons of steel, achieving a total profit of 89.407 billion yuan, but the average ton of steel realized a profit of 173.49 yuan, and the sales revenue margin was only 2.8%. The bottom line in the sub-industry. According to the report of the former Minister of Metallurgical Industry Wu Xiyu on February 21, the Steel Association's board of directors, the average profit income rate of steel enterprises in 2007 reached 7.3%. “The main reason for the lower overall efficiency of the steel industry is due to the sharp increase in international iron ore prices.†Luo Bingsheng believes. “BHP Billiton recently announced that the price has increased from US$155/ton in January to US$168/ton. This is the FOB price in Australia. The shipping cost to Shanghai is about US$200/ton iron ore. The past 12 The monthly increase has reached 50%. While Rio Tinto and Vale are still pricing in the quarter, the price is similar to that of BHP Billiton. However, Chinese steel mills can only passively wait for monthly notices of price increases and have no say. As a major player and promoter of iron ore negotiations in the past few years, Luo seems very helpless. Unlike other commodities, iron ore has been using the annual negotiation mechanism and is based on contract prices agreed between the three major iron ore producers and major steel producers. As usual, starting in the fourth quarter of each year, the world's mainstream iron ore suppliers negotiate with their major customers to determine the iron ore price for the next fiscal year (offshore price, any mine and steel mill to reach an iron ore sales contract, Other negotiations have accepted this result.) In 2004, Baosteel began to participate in the global iron ore price negotiations on behalf of China, and the China Iron and Steel Association was responsible for coordination; in 2009, the China Iron and Steel Association went directly to the stage and led the iron ore negotiations directly; In 2010, the global iron ore pricing system changed, and the quarterly pricing officially replaced the annual pricing benchmark system for 40 years. In 2011, BHP Billiton decided to implement monthly pricing for most of its iron ore exports. However, two other iron ore suppliers, Rio Tinto and Vale, have yet to adjust their quarterly pricing.
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