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Finally an end in sight for iron-ore price talks
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China's prolonged iron-ore price talks with Australian miners for this year's contract could be concluded by this month, according to the head of the China Iron and Steel Association.

Speaking to reporters at an industry conference, CISA chairman Zhang Xiaogang said yesterday that both sides expect to complete the negotiations before June 30 and that the outcome should benefit the interests of both parties.

The talks, which started late last year to set prices for fiscal year starting April 1, have been deadlocked after Baosteel Group on behalf of Chinese mills agreed with Brazilian miner Cia Vale do Rio Doce on a 65 to 71-percent rise for 2008 term prices in February.

Australian miners Rio Tinto and BHP Billiton are holding out for more, arguing they deserve a freight premium to reflect their proximity to Asia.

"Whether we reach an agreement with the Australian miners with a freight premium depends on the negotiations between Baosteel and the miners, and that should consider the interests of both sides," Zhang said.

CISA, funded by major mills, has previously said it firmly resisted Australia's proposal for a freight premium. Prices could rise more than 80 percent with freight premium being factored in.

Rio has said if the negotiation cannot be concluded by the end of June this year, it will become free to sell more ore on the cash market where prices are higher.

Meanwhile, India, another major ore supplier to China on the spot market, is said to have decided to impose a 15-percent export duty on iron ore. An official announcement is expected within days.

Orient Securities analyst Yang Baofeng said this will push up spot prices but the impact could be mitigated as there is already a levy.

At present, India imposes 300 rupees (US$7.1) per ton on iron ore exports with 62 percent of iron content or higher and 50 rupees per ton on lower grade ore.

(Shanghai Daily June 3, 2008)

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