A deal on benchmark iron ore prices is expected to be reached in April, Mr Zhang Xiaogang president of China's Anshan Iron & Steel Group urged the big ore suppliers to be more reasonable in their demands.
Mr Zhang Xiaogang said that "I am not taking part in the negotiations but a result should come out by April 1 it is almost mid year and if a price hasn't come out by then, it isn't normal.”
He refused to put a figure on how much the price would increase this year, but said it was likely to be much higher than the 20% expected at the end of last year. Mr Xiaogang said that "What a normal price should be is hard to say, but you shouldn't have one side making losses and the other making excess profits. All steel firms feel the same way whether it is Nippon Steel, JFE, POSCO, ThyssenKrupp, ArcelorMittal, US Steel or us we all feel deeply dissatisfied, but we have no option.”
Mr Zhang speaking on the sidelines of China's latest parliamentary session said that he had heard about proposals aimed at revising the decades-old benchmark pricing system, but whether it would happen this year would depend on the result of the negotiations. He said that all of that would normally be supplied through long term contracts but the proportion of spot market purchases has been steadily rising recently.
Mr Zang said steel mills across the world were all facing losses because the dominant miners had lost sight of the crucial balance needed to be struck between the steel industry and their iron ore suppliers. He added that "These are two stages in a production process and the profits should be calculated together. If the market is good we share the profits and if it isn't good we share the costs. But now the situation is different. European, Japanese, Korean and Chinese steel mills are all facing losses but the mining firms are making huge profits."
Negotiations in 2009 between the big miners and mills broke down when Chinese buyers failed to win bigger discounts than Japanese and South Korean rivals and many market watchers had expected long and potentially fruitless talks for the 2010 contract. With spot iron ore prices trading at double last year's contract price, analysts are looking for rises from 65% to 80% levels that few think China will find palatable.