A contract of iron ore supply for more than 26 million tons was signed recently between Wuhan Iron & Steel (Group) Corp. and Admiralty Resources NL, an Australian iron ore producer. Analysts say that this indicates that there are still robust demands for iron ore in the Chinese market, which will possibly increase the long-term negotiated price next year.
The big contract was negotiated just after a ten-year iron ore supply agreement between Baosteel Group Co., Ltd. and Fortescue Metals Group Limited was signed in March of this year. Jiangsu Shagang Group and Haixin Iron and Steel Group Co., Ltd. in Shanxi Province have also signed long-term purchase and sale contracts with emerging foreign mining enterprises.
Although these contracts are not conducive to competition with foreign enterprises; some steel factories signed contracts before the round of iron ore negotiations, indicating that the iron ore supply shortage problem has not been solved. This will lead to a demand in price increases from Companhia Vale do Rio Doce (CVRD), the world's biggest iron ore producer and exporter, BHP Billiton, a global leader in the resources industry and Rio Tinto, one of the world's leading mining and exploration companies. Sun Jianliang, executive director of Shanghai J. Sun Trading Consultants Ltd., told China Business News.
Many foreign institutions have forecast that the price of iron ore will rise 25 to 30 percent next year.
For more details, please read the full story in Chinese (http://www.china-cbn.com/s/n/000004/20071015/020000057482.shtml)
(China.org.cn, by Yang Xi, October 15, 2007)