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The Chinese government is going to use trade measures to support the Chinese steel enterprises in the new year’s iron ore price negotiation.
The Chinese steel enterprises suffered great loss in 2009 due to a dissatisfactory iron ore price negotiation. Fortunately, they might have the government’s support in this year’s negotiation.
Yao Jian, spokesman for the Ministry of Commerce, said in a press release on March 16 that the Ministry of Commerce will cooperation with the Ministry of Industry and Information Technology to assist the China Iron & Steel Association (CISA) and the major Chinese steel enterprises in the iron ore price negotiation. Trade measures, if necessary, will be adopted. Yao Jian didn’t give out detailed trade measures. He said: “Since the iron ore suppliers have not reached agreements with the Japanese and Korean steel enterprises, we can not tell our detailed measures, but we have got ready for this.”
Meanwhile, the CISA published a declaration on its website, saying: “On the afternoon of March 11, the European Confederation of Iron and Steel Industries declared its fierce opposition towards the iron ore suppliers’ intention to increase iron ore prices. We agree with and support our European peers’ view of points.”
Focus on Chinese Interests
When the 2010 iron ore price negotiation started, the three main suppliers, BHP Billiton, Rio Tinto and Vale continued to increase their quoted prices. The year-on-year increase of the iron ore prices rose from 20% and 30% to 50% and then increased to 80% and 90%. This made the iron ore prices much higher than the ones Chinese enterprises could accept. The two sides are getting further and further away from the final agreement.
Yao Jian said that China is a major manufacturing base for iron and steel products. It is also the largest steel producer in the world. All these factors make China an important consumer of the iron ores. In tradition, the important consumer should play an important in the price setting system.
Yao also said that the Chinese steel enterprises should enjoy the benefits that match China’s role as the largest iron ore consumer during the iron ore price negotiation. After the financial crisis, rebound happened to the demand of different countries for the iron ores. Therefore, China, as well as the other iron ore consumers in the world, wants a reasonable price for iron ores. “We hope that the result of the negotiation could bring benefits to China’s enterprises.”
Yao Jian also expressed his wish that the iron ore suppliers and the steel enterprises in different countries could cooperate with each other to maintain the price forming system with long-term agreement, in order to avoid big fluctuation of iron ore prices.
In truth, the recovery of the demand for steel products and the expectation for the more expensive iron ores have already exerted influence upon recent iron ore prices. On March 16, many steel companies saw the price increase of iron ores and charred coal. As a result, the request for heightening the steel product prices roared again in China. According to the official information, the high-end steel thread products were priced at 3,974 yuan (USD 582.1) on March 15, increasing by 128 yuan (USD 18.8) from a week before; the ordinary steel thread’s price was 3917 yuan (USD 573.9) with a 125-yuan (USD 18.3) increase from a week before; the hot rolling was priced at 4099 yuan (USD 600.5), 134 yuan (USD 19.6) higher than a week before; the price of cool rolling was 5,911 yuan (USD 866) and the increase was 141 yuan (USD 20.7); the price of medium plate increased by 149 yuan (USD 21.8) to 4193 yuan (USD 614.3).
“After all, the increase of the steel price can not be avoided,” said Liu Qiuping, an analyst of China’s steel industry. “Furthermore, the increase of steel price will heighten the prices of autos, ships, home appliances, machines and all the steel-related products.”
CISA on the Watching Side
During this year’s iron ore price negotiation, the European Confederation of Steel & Iron Industries acted as the frontrunner to challenge the three main iron ore suppliers. This association stressed that the extraordinary increase of iron ore prices was unreasonable especially when the world is recovering from the unprecedented financial crisis and it reminded the EU’s leaders of attaching importance to the possible damage the massive iron ore prices hike will bring to the global economy.
Previously, the European steel association and enterprises seldom intervened into the iron ore price negotiations between iron ore suppliers and steel enterprises in China, Japan and Korea. But when China insisted that the “prices should not be too high” this year, the European Confederation of Steel & Iron Industries came out and stood alongside China. If the iron ore prices increased by 80% to 90%, great damages will “happen to Europe’s economic recovery”, said the association.
According to the analysts, if the iron ore prices increased by 30%, the profits of China’s steel industry will be reduced by 40%. All the Chinese steel enterprises stated that they could no longer afford the increasing iron ore prices. According to an insider of a large steel company, the company will be doomed to losses this year if the iron ore prices increased by 40%.
But some commentators said that the CISA only gave out “oral” support to the European Confederation of Steel & Iron Industries instead of real actions. That means that the CISA has not decided how to deal with the situation. Meanwhile, the negotiations between Japanese and Korean steel makers are not over yet. The CISA still has time for more careful studies and preparations.
The Chinese steel enterprises suffered great loss in 2009 due to a dissatisfactory iron ore price negotiation. Fortunately, they might have the government’s support in this year’s negotiation.
Yao Jian, spokesman for the Ministry of Commerce, said in a press release on March 16 that the Ministry of Commerce will cooperation with the Ministry of Industry and Information Technology to assist the China Iron & Steel Association (CISA) and the major Chinese steel enterprises in the iron ore price negotiation. Trade measures, if necessary, will be adopted. Yao Jian didn’t give out detailed trade measures. He said: “Since the iron ore suppliers have not reached agreements with the Japanese and Korean steel enterprises, we can not tell our detailed measures, but we have got ready for this.”
Meanwhile, the CISA published a declaration on its website, saying: “On the afternoon of March 11, the European Confederation of Iron and Steel Industries declared its fierce opposition towards the iron ore suppliers’ intention to increase iron ore prices. We agree with and support our European peers’ view of points.”
Focus on Chinese Interests
When the 2010 iron ore price negotiation started, the three main suppliers, BHP Billiton, Rio Tinto and Vale continued to increase their quoted prices. The year-on-year increase of the iron ore prices rose from 20% and 30% to 50% and then increased to 80% and 90%. This made the iron ore prices much higher than the ones Chinese enterprises could accept. The two sides are getting further and further away from the final agreement.
Yao Jian said that China is a major manufacturing base for iron and steel products. It is also the largest steel producer in the world. All these factors make China an important consumer of the iron ores. In tradition, the important consumer should play an important in the price setting system.
Yao also said that the Chinese steel enterprises should enjoy the benefits that match China’s role as the largest iron ore consumer during the iron ore price negotiation. After the financial crisis, rebound happened to the demand of different countries for the iron ores. Therefore, China, as well as the other iron ore consumers in the world, wants a reasonable price for iron ores. “We hope that the result of the negotiation could bring benefits to China’s enterprises.”
Yao Jian also expressed his wish that the iron ore suppliers and the steel enterprises in different countries could cooperate with each other to maintain the price forming system with long-term agreement, in order to avoid big fluctuation of iron ore prices.
In truth, the recovery of the demand for steel products and the expectation for the more expensive iron ores have already exerted influence upon recent iron ore prices. On March 16, many steel companies saw the price increase of iron ores and charred coal. As a result, the request for heightening the steel product prices roared again in China. According to the official information, the high-end steel thread products were priced at 3,974 yuan (USD 582.1) on March 15, increasing by 128 yuan (USD 18.8) from a week before; the ordinary steel thread’s price was 3917 yuan (USD 573.9) with a 125-yuan (USD 18.3) increase from a week before; the hot rolling was priced at 4099 yuan (USD 600.5), 134 yuan (USD 19.6) higher than a week before; the price of cool rolling was 5,911 yuan (USD 866) and the increase was 141 yuan (USD 20.7); the price of medium plate increased by 149 yuan (USD 21.8) to 4193 yuan (USD 614.3).
“After all, the increase of the steel price can not be avoided,” said Liu Qiuping, an analyst of China’s steel industry. “Furthermore, the increase of steel price will heighten the prices of autos, ships, home appliances, machines and all the steel-related products.”
CISA on the Watching Side
During this year’s iron ore price negotiation, the European Confederation of Steel & Iron Industries acted as the frontrunner to challenge the three main iron ore suppliers. This association stressed that the extraordinary increase of iron ore prices was unreasonable especially when the world is recovering from the unprecedented financial crisis and it reminded the EU’s leaders of attaching importance to the possible damage the massive iron ore prices hike will bring to the global economy.
Previously, the European steel association and enterprises seldom intervened into the iron ore price negotiations between iron ore suppliers and steel enterprises in China, Japan and Korea. But when China insisted that the “prices should not be too high” this year, the European Confederation of Steel & Iron Industries came out and stood alongside China. If the iron ore prices increased by 80% to 90%, great damages will “happen to Europe’s economic recovery”, said the association.
According to the analysts, if the iron ore prices increased by 30%, the profits of China’s steel industry will be reduced by 40%. All the Chinese steel enterprises stated that they could no longer afford the increasing iron ore prices. According to an insider of a large steel company, the company will be doomed to losses this year if the iron ore prices increased by 40%.
But some commentators said that the CISA only gave out “oral” support to the European Confederation of Steel & Iron Industries instead of real actions. That means that the CISA has not decided how to deal with the situation. Meanwhile, the negotiations between Japanese and Korean steel makers are not over yet. The CISA still has time for more careful studies and preparations.