China's steel mills, said the current iron ore pricing mechanism "kidnapping"

Although the current iron ore prices have fallen below $ 100, down 50% compared with a record high. Chang Tien, general manager of Baosteel raw material procurement center wave 30 pointed out that the global demand for iron ore in the second half of the year may continue to decline over the first half, the current pricing mechanism for domestic steel mills like some kind of "kidnapping".

Chang Tien-wave, while the decline in demand in the second half of global seaborne iron ore supply compared with the first half is expected to increase more than 50 million tons, into the relatively loose.

Wang Qi, vice president of the China Iron and Steel Association said, was that iron ore prices will not fall below $ 120, because the cost of many domestic mines in the line below will lead to a cut-off to support prices. In practice, however, the domestic refined mineral amount of about 400 million tons, while in 2013, the new global iron ore production is expected to reach 350 million tons, 700 million tons by 2015. "China mine part discontinued, peripheral mine is fully capable of make up."

The face of the iron ore prices stumble endlessly, Chang Tien-wave, said the large steel mills perform quarterly index pricing like some kind of "kidnapping". On the one hand, the quarterly pricing reference index derived from the spot market, while the spot market sample areas for improvement. It is estimated that only 6% to 9% of the total sales amount of the three mines through spot tenders. That is less than 10% of the iron ore trading decisions most of the ore price agreement. On the other hand, when the ore price falling, perform quarterly agreements steel mills lost the opportunity to participate in market transactions, can only passively accept the index price. Therefore, the large steel mills will leave some room for the implementation of spot purchases.

In the case of gradual reversal of the relationship between supply and demand of iron ore, Chang Tien-wave should be explored more reasonable pricing. He think mine need emphasis on with large concessions marketing principles to protect the interests of the protocol client. For emerging iron ore spot trading platform, Chang Tien-wave is that its impact can not global. It is estimated that the annual volume of China's iron ore spot trading platform in about 10 million tons, while total imports of iron ore over 600 million tons. Spot trading platform can do much depends on the mine, the only platform Shetan transaction can be active. "

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