Iron ore price negotiation - CISA opposing index based pricing - 04 Jul, 2008
According to China Iron and Steel Association, BHP Billiton's proposal to link annual contract prices for iron ore to a market driven supply index rather than through negotiations between miners and mills is inappropriate and unfair.
The association said in a statement that, as the three global iron ore giants BHP, Rio Tinto and Vale control over 70% of seaborne iron ore supply using an index to set a market benchmark price will negate the demand and supply principle and diverge from the present real situation. This is inappropriate and unfair.
The CISA statement said “Baosteel reached a negotiated settlement with Rio Tinto for the new contract price. This practice and system is mutually beneficial and should be preserved. It added that a price index proposal isn't good for the development of a long term and stable relationship between miners and steel mills, therefore we strongly object.”
