Australia's annual iron ore long-term contract negotiations entered a "very" moment, the Chinese side and led to the extension of the "new" price reached, and with the Australian side of the iron ore price long-term agreements to continue the "rose", the cost of iron and steel enterprises In the increase. Analysts pointed out that this is also the cost of downstream industries will be directly affected.

"Threatened" under the compromise »

In accordance with established practice and the early years of the contract agreement, each of April 1, iron ore producers and steel production enterprises should implement the new long-term agreement for iron ore prices, then fails to reach a new price, the talks may be extended, to continue to supply In accordance with the supply of iron ore price last year, reached an agreement "Duotuishaobu."

But it is worth noting that with the signing of the contract mining enterprises, have a "deadline" of the agreement, that is after this period, no one has the right to unilateral rescission, to stop offering or receiving. China Steel Industry Association yesterday told an internal "First Financial Daily", China's most steel mills, this period are basically June 30, and the Japanese steel mills provided for in the contract period is generally 9 30.

So in June after entering, the Australian side many times mining enterprises "threatened" if the "Doomsday" after the two sides of supply and demand has yet to reach an agreement, it will be the price of iron ore to a higher spot market sales. In Earlier, BHP Billiton was introduced to the market spot price of iron ore for the establishment of the proposal hope that the future of the annual talks was "the spot index".

This reporter has learned, and identify certain extent, a higher price than long-term agreement, China has long been more worried about is the formation of the long-term supply contracts were cancelled, so that the traditional long-term iron ore price negotiation mechanism and supply system will also be thoroughly Broken, and this is precisely the Chinese side "compromise" accepted the request by the extension of the reasons for the higher prices.

China Steel Industry Association, Zhang Xiaogang, general manager of Anshan Iron and Steel Group also participate in the iron and steel during the public that the Chinese and Australian businesses hope to iron ore price negotiations in the June 30 completion.

And Rio Tinto announced the results of the negotiations, the Baoshan area yesterday has also repeatedly stressed that "the traditional pricing mechanism," known as the maintenance of traditional pricing mechanism, to maintain a normal market order, and maintain on the lower reaches of the long-term friendly cooperation, Baoshan Iron and Steel and Rio Tinto The company finally reached the 2008 annual iron ore prices.

However, the metal analyst Hu Kai pointed out that Australian mining companies are reluctant to break the long-term contract agreements and pricing mechanisms, as is widely expected in 2009 or 2010, the global iron ore market will have become surplus, the Australian side is not Two years since 2001 should be in the interests of the interests of the next 10 years away.

Douzhang steel costs accelerated rate reshuffle

Each year, China from Brazil, Australia, South Africa and Canada imports of long-term contracts of about 250 million tons of iron ore, iron ore prices rose just under 65 percent or more, the average cost is estimated to increase 33 to 34 U.S. dollars / ton, the Chinese steel industry needs at least Spending more than 8.4 billion U.S. dollars, or 60 billion yuan. And a long-term contracts of large and medium-sized steel enterprises in China, a total of over 1,400 billion yuan of profits only.

China and the United metal mesh to the latest report is that, in addition to iron ore resources of the domestic iron and steel production enterprises constitute a pressure on costs, another major increases in the prices of raw materials coke can not be ignored.

Shanxi's coke price recently increased to 300 yuan per ton, thus, in June alone has accumulated 600 yuan price hike, a history of Coke or a maximum price of a monthly, which is cheaper than the beginning of the year prices rose 127 percent, more than The same period of domestic iron ore (up 53.4 percent), spot ore imports (up 50.4 percent) and scrap (38.1 per cent increase), and other raw materials rise, which would result spiking upward pressure on steel production costs, profits were squeezed.

Last year, in addition to price hikes of iron ore, coal, coke, shipping and other upstream prices also rose, large and medium-sized steel enterprises in China in December 2007 average steel-making pig iron production costs than the same period in 2006 increased by 31.05 percent.

According to China Steel Industry Association's report, the use of iron ore in different steel mills last year, the cost pressures faced by different. The use of production for more than 50 per cent share of iron ore, ore imports or the implementation of long-term trade contracts, long-term shipping contracts enterprises, steel-making pig iron production costs about 12 percent year-on-year increase in the use of iron ore production for about 30 percent, or import the implementation of mine Long-term trade contracts, long-term shipping contracts accounted about 50 percent of the enterprises, steel-making pig iron production costs year-on-year increase of 26 percent of the use of outsourcing high proportion of mining, trade and immediate implementation of the spot contract-based shipping companies, steel-making pig iron Manufacturing costs increased 55 percent year-on-year around.

Therefore, there are trade analysis, the steel industry, the negotiating price increases in the short term negative and long-term may be conducive to further increase the large-scale iron and steel enterprises and small enterprises gap between the level of profits. As the small iron and steel enterprises to break even, while the profit level of large-scale iron and steel remains high, the price of iron ore rose sharply to accelerate out of the steel industry backward production capacity, but also conducive to accelerate the industry's mergers and reorganizations and thus control the domestic iron and steel Productivity increased by the disorder.

However, many analysts have pointed out that iron ore and coke prices caused by the rising cost of steel enterprises, shipbuilding, engineering machinery and appliances industry will have a more far-reaching implications.

In China and Brazil reached the CVRD iron ore prices rose 65 percent, but China's iron and steel stocks sharply higher, because the industry generally believe that iron ore prices have been rising in the Baoshan Iron and Steel and other large steel mills the first quarter of the price increase reflected in the And downstream sectors of the strong demand for steel is expected to enable the market to believe that the raw materials such as iron ore and coking coal prices will eventually pressure was passed on to the consumer on the business.