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Saturday, May 16, 2009

CVRD metal ore out of the discussions

By Zou himfr

Bargaining power will be handed over to Rio Tinto and BHP Billiton

April 28, Vale do Rio Doce (VALE) boss leader of China Zhu to this reporter's interview, said: "We have removed from this year's metal ore discussions, will make quotation to other mines and iron alloy mills in China to discuss the price."

I am vice president of the steel net, said: "In 2008, CVRD and Chinese steel prices the lowest price agreement, they learn the lessons of last year, will be bargaining to the Rio Tinto and BHP Billiton to look forward to negotiate higher the price. "

At present, due to the Association in 2008 and long has been the high price of nearly 50% of the value there, the Chinese steel mills have said that the Society no longer accepts a long value. However, Zhu said: "Our long-Association contract rate, have not been affected."

Not long before, the Chinese Iron and Steel Industry Association (referred to as "China Steel Association"), the Secretary-General, told this reporter single Shanghua that CVRD is the basis of an interim pricing plan in 2008 to less than 20% of the contract price to the Chinese steel prices the sale of iron ore plant, the difference will be the contract price agreed in 2009 after the supplement.

Zhu said: "So far, we have long supplied the Association is mine, the cost as asserted by the Association in 2008 at the implementation of the long, not in the location market for low-cost sales."

28 held in the China Steel Association in 2009 the second group debate on the knowledge development, China Steel, manager vice head of the Association for Luo Bingsheng to refute the atop assertion, CVRD ore sales bang discount for each pay for, not a interim charge, is a long ADPL price. "(River Valley) that is not congenial, why not vanquish them tickets."

T ian zhi ping deputy general director of Hebei Iron & Steel Group, advised this reporter that "we do not have to pay for mine in the site market, the Association paid for mine are long, costs had plunged in 2008 than 20%." Jia liang qun in addition said: "As far as I acquaintance with hard metal, and no one is keen to re-price manager chief director of the Association, the charge is too high out of the way, and in certainty in the conflict CVRD ore sales discount for each purchase! "

Prices still contentious, but "iron ore discussion mechanism" change is inevitable.

Zhu said: "As the cost catalogue for appearing markets, for example the causes for the expansion of the location market, the new charge has occurred." Zhu worried that the alternative of CVRD standard cost system.

In that case, the price mechanism in the negotiations, the Chinese steel enterprises the choice of what?

Prior to that, Dragons Group made a "quarter of pricing" of the compromise type, to return the earlier "long-Society" and "spot" charge of two. However, Luo Bingsheng said that the Chinese boundary not ever lifted any quarter cost type, cost is still adhering to the belief of the year.

Luo Bingsheng survivors strained that "China has no strategies to cease the right to converse the charge first," "Japan, Europe and the United States and other nations to ascertain the rate of descent, if not in conformity with the prerequisites of the Chinese boundary, China will adhere to its beliefs carry on to negotiate," he restated that China's charge foundation line is the "best 40 out of 100 down to 50%."

However, Zhu said: "40% of the descent is only a guess of the Chinese boundary, every one can make a guess, but in the end be reliant on the market speak."

The future of China's metal ore market demand, Zhu stayed "very optimistic" mind-set, "the Chinese market has shown clear indications of recovery. I accept as factual that the allowance of 4,5 months of trades to rise."

China's steel ore deals are in certainty rising. China Steel Association statistics present that the first quarter of 2009, China imported steel ore 131.5253 million tons, an advance over the matching interval last year 20,861,100 tons, an advance of 18.85%; which, in March steel ore deals 52,080,200 tons, a record single-month record high deals than the advance in deals in March last year 16,398,000 tons, an advance of 45.96%.

Luo Bingsheng consider, "hopes to advance steel ore deals in China's scenery, it is impractical to achieve." He farther described that the first quarter of the steel ore deals far exceeded the demand for steel and hard metal goods produced, at present, the seaport has amassed close to 70 million tons of steel ore, hard metal mills in China have been extensively reduced. Tian zhi ping in addition uncovered that Hebei Iron and Steel has been re-cut by 10%. - 18762

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