The China Iron and Steel Association has denied market rumors that it has set a 30-percent ceiling price rise in talks with iron ore suppliers, according to a report in Thursday's China Securities Journal.
Association vice chairman Luo Bingsheng said the rumors were not helping negotiations for 2008 iron ore imports, the paper reported.
According to rumors, the world's three major iron ore providers, BHP Billiton, Rio Tinto and CVRD, wanted to raise prices by least 50 percent.
"There is not such ceiling on the Chinese side, and such pre-determined ceilings cannot facilitate the process of the negotiation," said Luo, adding the association would pay close attention to how the negotiations could benefit the Chinese iron and steel industry's development.
China, the world's largest steel producer and consumer, imported 383 million tons of iron ore in 2007, up 57 million tons or 17.4 percent year on year, according to statistics from China Customs.
Luo predicted that imports this year would rise by 40 million tons.
"Domestic demand growth for pig iron will probably drop from 14.11 percent in the second half of 2007 to 12 percent in 2008 and exports of iron and steel products by domestic manufacturers are expected to decrease by 20 million tons," said Luo.
China is expected to eliminate 100 million tons of iron production capacity and 55 million tons of steel production capacity from 2006 to 2010.
The world's biggest iron ore provider, BHP Billiton, announced on Wednesday it had signed a 10-year deal to supply China's Baoshan Iron and Steel Co. (Baosteel) with an additional 94 million tons of iron ore.
BHP Billiton would supply 10 million tons of iron ore annually to China's largest steel producer, up from six million tons under previous long-term supply arrangements, the two said in separate statements.
On behalf of Chinese steelmakers, Baosteel has been negotiating 2008 prices since December 2007 with major iron ore providers, including BHP Billiton, Rio Tinto and CVRD.
In late 2006, Chinese steel makers agreed with major providers on a 9.5-percent price rise for iron ore imports for 2007. The lower-than-expected increase was deemed a success for Chinese buyers.
(Xinhua News Agency January 31, 2008)