Iron ore spot prices reach record high this week - 29 Dec 09
Industry insiders said that iron ore spot prices reached a record high this week, triggered by moves from global mining firms to enhance their position in ongoing negotiations.
A sales manager at Beijing Ye Steel Trading Co said that "The fact that traders are stockpiling steel on the prediction that steel prices will rise next year caused the market to soar. Even in the slack winter season, steel traders are storing stocks because they foresee an improving market next year."
China's largest steel mill Baosteel and Anshan Steel announced plans to raise delivery prices of steel products for next month by CNY 100 to CNY 600 per tonne.
Analysts said that the price hike could put domestic steelmakers in a disadvantaged position in iron ore talks as raising steel prices provides more room for miners to hike prices. The rising spot price of iron ore also put pressure on the benchmark price for the material.
The annual negotiation between miners and Chinese steelmakers are likely to start in late December 2009. Both parties aim to finish the talks before April 1st 2010. This year's iron ore price talks have been deadlocked since June when China's chief negotiator, China Iron and Steel Association insisted on a 45% discount over the last year's prices, after a 33% cut in benchmark prices had been reached by the three global miners with Japanese and South Korean steel mills.