After eight years of iron ore negotiations, the dust settled in the three major mining companies to push the index pricing. The newspaper learned from the China Iron Ore Negotiation Group that has just returned from Australia that the change pricing mechanism has not been included in the theme of actual negotiations in 2011. The control of sea freight and price index information has become the focus of a new round of competition. . According to the members of the group, from the content of the negotiations, the index-based quarterly pricing model has been recognized by both parties, and the China Iron and Steel Association no longer emphasizes the need to change it. However, according to the current offshore pricing method for iron ore, the sea freight that fluctuates between US$6 and US$100 per ton is not included in the contract price, which makes it difficult for Chinese steel mills to bear. It is understood that the three major mining companies have basically monopolized about 70% of the world shipping market. The lesson from previous years is that sea freight rates usually fall sharply during iron ore negotiations, and once the price is signed, sea freight rates will rise sharply, and the cost of steel mills will increase substantially. Not only that, the three major mining companies have also begun to affect the collection of domestic iron ore price information and the preparation of the index. The relevant person in charge of China Steel Association expects that in view of the iron ore negotiation period, various speculation factors will push up the price. In 2011, iron ore prices will show a trend from high to low, and then low because of global iron ore. The situation of oversupply is increasing. Negotiations turned to a week ago, the China Iron and Steel Association led China's iron ore negotiation team to Australia to negotiate contact with the mine, including Baosteel, Wuhan Iron and Steel and other major domestic iron and steel business representatives. From the data point of view, the current situation is favorable for China's iron ore negotiation team. According to the statistics of China Steel Association, China's crude steel output reached 6.2665 billion tons in 2010, an increase of 9.3% year-on-year; pig iron increased by 7.4% year-on-year. However, the annual import of iron ore has dropped by 10 million tons. China's iron and steel ratio has further declined, from 96% to 94%. The China Iron and Steel Association analyzed that these two points mean that China can use less than 15 million tons of iron ore. At the same time as this negotiation, the deposits of iron ore in China's ports have reached more than 80 million tons, maintaining the high-pressure port situation in recent months. In the view of China Steel Association, more than 80 million tons of iron ore is enough for Chinese steel mills to eat for two months. The sea freight rate also fell to a minimum, Australia fell to around $6, and Brazil fell to around $18. Although the situation is so favorable, the actual situation in the negotiations is that the monopoly status of the three major mining companies is still difficult to shake. The above-mentioned iron ore negotiating members said that the current iron ore negotiations are not only about the relationship between supply and demand, but also the monopoly of the three major mining companies. The control of prices and the control of sea freight are behind the negotiations. of. In fact, the China Iron Ore Negotiation Group has not mentioned the issue of the index-based quarterly pricing model and the ore price itself in Australia's contact with mining companies. A related person from the China Iron and Steel Association said that the reason for the sea freight rate is that the current pricing is based on the FOB price, and the sea freight rate is not included in the contract price. However, the lesson from previous years is that sea freight rates usually fall sharply during iron ore negotiations, and once the price is signed, sea freight rates will rise sharply, and the cost of steel mills will increase substantially. Take Rio Tinto's pricing of $135 in the first quarter. At present, the sea freight rate from Australia to China is about US$6, and the CIF price is US$141. However, once the sea freight rate rises above US$50, the CIF price of Chinese steel mills will reach 185. In the US dollar, Chinese steel mills will bear an additional cost of US$44 compared to the original contract. At present, the three major mining companies have basically monopolized about 70% of the world shipping market. The above-mentioned people of China Steel Association believe that the fluctuation of sea freight is the result of the control behind the mining company. In the negotiations in Australia, China Steel Association proposed that the sea freight rate can be stable and reduce fluctuations. However, the pricing method based on the CIF price has also been denied by the China Steel Association. Because most of China's large steel mills have signed shipping contracts with overseas shipping companies for a decade or more in recent years, it is difficult to change. In addition, the negotiation of CIF involves the shipping company, which will make the situation of iron ore negotiations that are beyond Chinese control more complicated. It has been eight years since the system changed China's iron ore negotiations. From 2004 to 2008, the previous rounds of iron ore negotiations between China and the three major mines were mainly reflected in the dispute over pricing power, which was also the era in which the long-term pricing mechanism was established. China Steel Association believes that China, as the world's largest consumer of iron ore, should receive reasonable pricing rights. During the period, Baosteel, the negotiator of the Chinese steel mill, had the lessons of being forced to follow up, and also had the experience of winning the first price. Although the industry has been controversial about the final annual price, the years of the long association have become the collective memory of today's Chinese steel mills. From 2009 to 2010, due to the economic crisis, some Chinese steel mills and three major mining companies successively defaulted or even destroyed the contract. The three major ore companies took this opportunity, and BHP Billiton first broke the previous annual long-term price mechanism and pushed for a more flexible pricing mechanism. During this period, there have been various contracts for quarterly, monthly or even full stock. The China Iron and Steel Association once hoped to re-enter the negotiations back to the annual long association system. But in the end, the index-based quarterly pricing mechanism was unacceptable to most steel mills. In 2011 , the index-based quarterly pricing was recognized by the China Iron and Steel Association. The disputes between the Chinese steel companies represented by the China Iron and Steel Association and the three major mining companies focused on some modifications to this pricing system. The relevant person in charge of the China Iron and Steel Association admitted to the newspaper that due to the monopoly power of the three major mining companies, the index-based quarterly pricing system is difficult to change in the short term. The steel industry “My Steel Network†defines 2010 as the turning point in the iron ore pricing system. At present, spot pricing, monthly pricing and quarterly pricing methods exist, but the pricing is basically based on the imported spot mine index. The agency predicts that the 2011 index of ore imports is estimated to be more than 70% of total imports. However, when the China Iron and Steel Association has expressed its willingness to accept quarterly pricing, the changes in the pricing system of the three major mining companies have reappeared. Although iron ore is still in progress in 2011, BHP Billiton has indicated that it will sign a monthly agreement with the steel mill. In fact, in 2010 some Chinese steel mills have accepted BHP Billiton's monthly pricing model and signed an agreement. In this regard, China Steel Association related sources said that from the investigation of steel mills, quarterly pricing is the shortest cycle that steel mills can accept, and short, will have a great impact on the production and operation of steel mills. However, what happened between the three major mining giants and Chinese steel mills is like another heavy blow to the above remarks: BHP Billiton has been strongly promoted in China since the beginning of this year, and has been accepted by some steel mills. “These steel mills are mainly trade-oriented and financially-owned companies that accept monthly pricing, not for production, but more for speculation,†said the source. Currently, Rio Tinto and Vale continue to implement quarterly pricing models among the three major mining companies, with Rio Tinto quoting $135 in the first quarter and BHP Billiton quoting $155 in January. Price Trends At present, some institutions in China have begun to collect iron ore index information to cope with the trend of pricing of the three major mining companies in the future. In this regard, China Steel Association does not agree. The relevant person in charge of the China Iron and Steel Association said in an interview with this newspaper that "the data collected by some institutions in China can be recognized by the three major mining companies, and they are all controlled by them. Obviously, if some organizations have developed index pairs Large mines are unfavorable, and it is difficult to get their approval.†For the index-based index collection, China Steel Association has always believed that the three major mining companies are not transparent enough and fair. China Steel Association believes that the data of large and medium-sized steel mills and major ports provided by China Steel Association should be used as the index basis, and this basis is to link the steel prices of steel mills with the iron ore price index. “In 2011, the world iron ore and steel market supply and demand relationship is basically balanced. In the current world economic environment, iron ore prices will show a downward trend in the next two years.†Ma Zhongpu, chief analyst of United Metals Network, told this newspaper. Although Brazil and Australia will increase their iron ore agreement prices by 4%-7% in the first quarter of next year, it is unrealistic to expect iron ore prices to continue to rise in 2011 due to the weak world economy. The relevant person in charge of the China Iron and Steel Association predicts that in 2011, the price of iron ore will show a trend from high to low. The former high is because during the iron ore negotiation, various speculation factors will push up the price; the latter is because the global iron The situation of oversupply of ore will increase. Regardless of the final trend of iron ore prices, all indications are that the three major mining companies are looking for new pricing models, and index pricing will not be the end. Faced with the pricing trajectory of mining companies pointing to spot and futures, it is not known how China Steel Association and Baosteel will be able to deal with the big steel mills. What is certain is that every change in the pricing system will change the operating track of Chinese steel companies to a certain extent, and the strong position of the three major mining companies will be difficult to change. The China Steel Association complained that in the Australian negotiations between the two sides, the mining company has a higher price for the ore grade, and the price requirements are too high, and some are even too high, so we would rather have some low in recent years. Grade of ore.
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