China Warns Small Steel Firms Not To Break Ranks In Ore Talks

China's national steel body has demanded its small firms not to break ranks in deadlocked price talks with global iron ore producers, a report said April 27. Authorities have called for strict solidarity "in the overall interests of China's steel industry", the Steel Business Briefing journal quoted China National Iron and Steel Association vice president Luo Bingsheng as saying.

Baosteel, which is leading the discussions for all Chinese firms, is trying to secure the cheapest possible price from the world's three largest exporters -- Anglo-Australian miners Rio Tinto and BHP Billiton and Brazil's Companhia Vale do Rio Doc. These international companies supply China with about 75% of its imports.

The talks have broken down amid China's insistence that it cannot accept another major price hike after last year's arrangement in which Chinese firms were forced to agree to a 71.5% increase.

With the initial April 1 deadline for the price to have been settled long passed, the warning from the steel association appeared to indicate concerns that smaller Chinese firms may be looking to negotiate their own prices. "Once Baosteel concludes the 2006 price negotiations, we will publicize the results," another senior official with the China National Iron and Steel Association said.

An agreement on the annual contracts is important because, with China the world's biggest ore importer, it helps set the price around the globe.

Copyright Agence France-Presse, 2006

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