Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (5777)	3/14/2006 9:19:57 PM
From: RealMuLan	Respond to of 6370

China warns of damaged relationships but denies capping iron ore price Andrew Trounson March 15, 2006 CHINA'S commerce ministry yesterday warned that "long-term co-operation" with iron ore miners had been damaged by what it called the unfairly high prices demanded on the spot market. In a statement apparently clarifying that it had not capped iron ore prices, the commerce ministry appeared to hit out at the big three miners, Rio Tinto, BHP Billiton and Brazil's CVRD, which are demanding a further rise in annual contract prices at negotiations with steel mills in China and Japan. "China has imposed import restrictions because some foreign suppliers participating in the contract negotiations are selling in the cash market at high prices," the ministry said. "Their behaviour has ruined long-term co-operation between the two sides," it added. The ministry said it was taking "temporary technical measures" to monitor the prices, quantities and origin of spot cargoes. However, the ministry's attack has confused Australian miners given that the vast bulk of China's spot purchases come from India, with ore from Australia largely sold under long-term contracts. The statement followed directives last week from the commerce ministry that appeared to impose price caps in what was widely interpreted as a heavy-handed attempt to influence contract price negotiations. The move raised concerns that a price cap would breach World Trade Organisation rules, and the Department of Foreign Affairs and Trade called in China's ambassador, Madam Fu Ying, seeking a "please explain". Beijing denied any plans for a price cap and told the Australian embassy that its notice on the iron ore market had been intended only to deal with "short-term capacity constraints" at Chinese ports. Last weekend Trade Minister Mark Vaile said: "We have now been advised that trade will not be affected. We will continue to liaise closely with Australian companies to monitor the situation." The big three suppliers between them control about 70 per cent of the world's seaborne trade in iron ore and last year won a 71.5 per cent rise in prices in the face of strident opposition from China. Chinese steel makers, including Baosteel Group, are locked in annual talks with suppliers over iron ore prices after they rose to a record last year, eroding profits. "The Chinese are proving a formidable force," Alfred Wong, of UOB Asset Management in Singapore, said. "They're trying to bring down prices, but it's too early to say if they will succeed. The producers are saying prices should be set by the market." China imports 44 per cent of the world's seaborne iron ore shipments. The Trade Ministry declined to comment on the Chinese government statement as "it's a commercial matter". Additional reporting: Bloomberg theaustralian.news.com.au