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Baosteel, Shagang may carry out the cooperation Feb. 9 MetalBiz--With the coming of Tiger Year, the cooperation between Baosteel and Shagang gradually enters the blissful circumstance.
On February 8, one insider of Baosteel Group told to reporters that currently they are considering the arrangement issue of employees. Meanwhile, he noted that the assets assessment work has finished, and it is estimated that the move will made at the end if the first quarter or in the second quarter.
The assets assessment of Baosteel-Shagang has been accomplished.
As the powerful state-owned and private steel enterprises, Baosteel and Shagang, their cooperation always draws the wide attention from the market.
As early as September 2009, Shen Wenrong, chairman of Shagang board acknowledged in one interview that Shagang had the intention of bringing in the investors, and it contacted Baosteel, Goldman Sachs, also with WISCO, Ansteel, etc.
However, Baosteel’s officials unveiled that the offering price had not the conclusion.
Two years later, the cooperation between Baosteel and Shagang is resumed. According to the report, in the beginning of January, the related officials in assets department of Baosteel had carried out the investigation and communication with Shagang. Shagang’s insiders declared that they are talking about the relevant strategic cooperation possibility, even joint venture.
Currently, from the viewpoint of the information, the cooperation is rapidly promoted. The assets assessment has been completed. One Baosteel’s insider said that they start to consider arranging employees.
However, the Baosteel’s official did not give more detailed information on the their employees arrangement, but he showed that the work will make the new progress at the end of the first quarter or in the second quarter.
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MEPS expects: 2010 global steel output will rise 11% Feb. 9 MetalBiz--Steel consulting company, MEPS International Ltd. stated on February that the global steel production in 2010 is expected to increase by around 11% year on year, reaching 1.35bln tons hitting a record.
According to data of MEPS, the steel output in 2009 is estimated to stand at 1.2175bln tons, while the highest point in 2007 was 1.345bln tons.
The world’s largest steel producing country, China’s steel production is predicted to go up by 7.3%, hitting 609mln tons, while 27 EU’s members’ steel production is foreseen to increase by 17%, reaching 161.5mln tons.
MEPS said that they predicted that in the following years, the steel output in all the regions across the world will climb. The steel production of most industrial countries in 2010 will increase by two digit year-on-year, because currently they resume their production halted in 2009.
The company stated that CIS, Africa, South America, Middle East, the steel production increase extent of the developing countries of Asia is expected to get mild.
In contrast, World Steel Association’s expectation in October showed that the steel demand in international market will increase by 9.2%, striking 1.2bln tons.
MEPS predicted that the production of the blast furnace pig iron in 2010 will top 994mln tons, up by nearly 11% on an annual basis.
MEPS claimed that the recovery speed of the steel production is relatively quick. MEPS noted that the rapid revival of the steel yield is almost caused by the China government’s economic stimulus measures.
The company said that as China’s demand accounts for around 50% of the global steel demand, and therefore the active behavior will play the positive impact on the global steel industry.
MEPS predicted that the steel production in 2011 will further hike, but giving no figure.
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Iron ore negotiation is expected to lean toward China side |
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Feb.9 MetalBiz—The current situation is changing quietly. The negotiation between China and iron ore three giants is slowing lean toward the former who are in passive stance previously.
On Feb.8, industry prevailed news that three ore giants who turned to S.Korea-Japan steel enterprises previously have started negotiation with China, while on Feb.6, Resourcehouse signed U.S.$60bln coal trading agreement with China Power.
However, Rio Tinto suddenly added a post of president in China and announced Ian Bauert as new president who will lead the teams of Rio Tinto in Beijing, Shanghai and Guangzhou.
The sudden friendliness of Australia to China makes the complicated ore negotiation gradually turn to be better. It mainly due to the crazy surge of US Dollar blocks the appreciation of Australia Dollar which has something related with prices of bulk commodities such as iron ore, copper and coal.
Australia Dollar appreciation blocked, Rio-BHP suppressed
In October of 2009, central bank of Australia led to raise the interest rate, while the continuous rising of interest rate has not ever occurred. The continued appreciation of Australia Dollar hinted the gradual price increases of iron ore, copper, aluminum and coal. Because the bulk commodities of Australia are mainly sold in China, therefore, the boom demand of China market is one of factors support Australia Dollar to go strong.
However, since entering in 2010, market has changed significantly. The US Dollar skyrocketed, Australia Dollar suppressed and bulk commodity prices presented downward tendency. On Feb.2, the Reserve Bank of Australia surprisingly announced the interest rate maintained unchanged, under the impact, Australia Dollar/US Dollar slumped more than 100 points at the same day.
In turn, US Dollar skyrocketed. US Dollar index has boosted from 76.7 in mid-January to 80.30 on Feb.8. The continued surge of US Dollar suppressed prices of bulk commodities such as crude oil, gold and nonferrous metal.
China’s regulation exert effect, iron ore price present turning point
In iron ore negotiation of 2009, although China Iron & Steel Association (CISA) strongly insisted the stance of 40% bottom line, the three ore giants also seized the threat of China’ s active demand and did not agree finally. The negotiation was deadlocked and China’ s steel firms had to settle price with the long-term contract price inked by Rio Tinto and Nippon Steel.
Industry insider analyzed that as Australia resource products have great dependence on China market, the ups and downs of Australia Dollar has close relation with China’ s real estate market as well as stock market, if China wants to change the passive position in the negotiation, it must regulate real estate market and crunch monetary policy.
Obviously, since the end of 2009, there were many measures issued to regulate real estate market as well as series of countermeasures to crunch monetary flow, which let iron ore negotiation seem to easier.
Affected by the regulation of real estate, construction steel price which straightly rose previously began to drop recently. On Feb.6, Shanghai exchange market debar contract price slipped 0.34%, ended with 4,109 yuan per ton, hit three-month lowest. The wire rod price fell 0.31%, closed with 3,913 yuan per ton, which was also the lowest offer since November of 2009.
Monitoring data showed that till Feb.4, the mainstream price of 63.5%/63% Indian power ore was U.S.$126-128 per ton in domestic market, fell U.S.$9 per ton from the U.S.$135-137 per ton in last month. However, there is scarce transaction with the current price. The iron ore price is expected to adjust down.
Strive for China price
Before New Year’ s Day, three ore miners had laid China aside and turned to S.Korea-Japan steel enterprises to negotiate, set the target of 40% increased. Recently, reporters learned from several industry insiders that China’s delegates led by Baosteel have carried out a round of formal negotiation with international three miners. As the price rising of iron ore is inevitable, now the increase extent is a market focus. China has repeatedly stated that ceiling line of China is 30% on the basis of 2009. It is learned that Rio Tinto had finalized first round of negotiation with S.Korea-Japan’s steelmakers, the former asked for an increase of 40% based on 2009.
“Recently price of bulk commodities is bound to drop, Australia Dollar also touches bottom, together with the enhanced regulation of China in real estate market as well as the integration of steel enterprise, the favorable situation is leaning to China. China is expected to achieve the goal of 30% price rising”, a middle-level man of Valin said. |
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Rio firstly set president in China to enhance long-term cooperation relation |
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Feb.8 MetalBiz—When Rio Tinto case is still hanging, Rio Tinto begins to add president in China to rebuild the relations with China as well as expand China’ s market.
Reporters learned from Rio Tinto that the company announced it nominated Ian Bauert as president in China. Before this appoint, Ian Bauert was mainly responsible for Rio Tinto’s marketing and sales business in Australia.
After holding the post of China’s president, Ian Bauert will work in Rio Tinto’s representative office of Shanghai, responsible for managing teams in Shanghai, Beijing and Guangzhou.
In early more than 20 years before, Ian Bauert established Rio Tinto’s first representative office in China. Previously, he once assumed several posts in Rio Tinto, including president of Dampier Salt Company and chairman of ore new project. Currently, he ranks fourth in the board of directors of Rio Tinto’s iron ore department.
TomAlbanese, CEO of Rio Tinto said “to set this post is to enhance the long-term cooperation relationship with China”. It is worth noting that in previous days, Rio Tinto had not separately installed a post in China.
Presently, the iron ore negotiation of 2010 between China and international three ore giants is ongoing, while Rio’ s four employees who were arrested last year have transferred to People's Procuratorate of Shanghai. According to the related judicial procedure, the case will formally enter into the stage of prosecution in the end of Feb.. |
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CISA: ore negotiation of 2010 is not near the end |
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Feb. 5 MetalBiz—On Feb.4, China Iron & Steel Association (CISA) board meeting of 2010 was held in Beijing. As the iron ore negotiation is in sensitive time presently, the participated executives of the domestic large-scaled steel enterprises kept secrets for any problems about the iron ore negotiation.
However, De Qilin, president of CISA and general manager of WISCO said in the meeting breaks that “the negotiation is not nearing the end, and it is a long time to reach an outcome”.
Negotiation is still ongoing normally
Recently news spread that the negotiation between China’ s steel enterprises led by Baosteel and international mining giants has drawn to the end and there will be a result very soon. The news said that the international iron ore price negotiation of 2010 has a major turning point currently. On behalf of China, Baosteel has succeeded carrying out the substantial contact with BHP and Rio Tinto.
Deng repeatedly stressed that the negotiation is ongoing normally and naturally.
At this time of the year, it is a time for steel enterprises negotiating the iron ore long-term contract price with the international mine giants. Previously media revealed that Rio Tinto had finished the first round of negotiation with Japan-S.Korea steelmakers, the former required an increase of 40% on the basis of 2009.
The negotiation of 2010 is dominated by Baosteel, however, Xu Lejiang, chairman of Baosteel refused to comment any media.
Since 2004, Baosteel firstly participated in the annual iron ore negotiation, it only settled price agreement with 9.5% rising with Japan-S.Korea and Vale in 2007. In 2007, China firstly determined ore price by itself, which owned a favorable reception in the industry, while someone believe that Vale is still the sally port of this year’s negotiation.
Sea freight surged significantly in 2009
With the imported ore price (CIF) slumped 41.36% in 2009, the sea freight surged dramatically, which increased the cost of steel enterprises.
Well-informed personnel disclosed that according to the data provided by CISA for participated delegates, till the end of December of 2009, the sea freight from Brazil and West Australia to China was U.S.$27.09 and U.S.$11.05 per ton respectively, up 206.1% and 100.91% correspondingly.
In fact, the sea freight from Brazil to China once amounted to U.S.$43.04 and U.S.$42.18 per ton in June-July and November, then it fell back to the present level. |
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Iron ore negotiation of 2010: China strives for bottom line of 30% |
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Feb. 4 MetalBiz—The new round of iron ore negotiation which influences the steel industry nationwide, even affects China’s macro-economy is ongoing presently. It is learned that steel representatives of Baosteel and WISCO have been in Singapore, negotiating with the global three ore miners, while China Iron & Steel Association (CISA) who led the price talks of 2009 retired from the leading post this year.
Baosteel re-dominate the negotiation
It is learned that at the end of 2009, steel enterprises held a preparation working conference about the iron ore negotiation, in which Baosteel was nominated to delegate to negotiate. Experts said that if no one can change the result, let steel enterprises themselves to negotiate is more close to enterprises’ actual production, while Baosteel is the most representative firm.
As a leading steel enterprise, Baosteel has been on behalf of China to negotiate with international ore giants, while it changed in 2009. As the irreconcilable difference between Baosteel and other steel firms, CISA shouldered the responsibility of Baosteel, however, the result was undesirable. The iron ore negotiation ended with no result due to no common ground between both parties.
It is learned that the iron ore negotiation contract of 2008 was due till March 31 of 2009. From April 1 of 2009, China’ s steel enterprises used the long-term contract ore provided by the three ore miners, temporarily the price is still settled by 20% discount based on the long-term contract price of 2008. As the provisional price of 20% discount from long-term contract price of 2008 was higher than the initial price before the end of May of 2008, three miners should return most payment to China’ s steel enterprises in accordance with the principle of refund for any overpayment or a supplement for any deficiency. However, as China had not announced the iron ore negotiation price settled with the three miners, the latter are reluctant to return the payment owing to the lackage of formal evidence.
It is estimated that China’s steel enterprises overpaid U.S. $827mln, because China did not reach the final price in 2009. According to the present exchange rate of U.S.$1 converting into 6.8 yuan, the figure has amounted to 5.6bln yuan.
China may be forced to follow Japan-S.Korea price
It is revealed that presently the three mining giants of Rio Tinto, BHP Billiton and Vale can only negotiate iron ore benchmark price with other Asia customers such as S.Korea and Japan, which they were cold to China’ s steel customers. Australian miners close to the three mining giants said at the beginning of the iron ore negotiation in 2010, Japan-S.Korea steel firms have agreed that the iron ore price must increase, the discussion of the both parties mainly aims at the extent of the rising. Rio Tinto has finished the first round of negotiation with Japan-S.Korea steelmakers, the former required an increase of about 40% at the basis of 2009. Although Japan-S.Korea steel firms have not accepted, they do not oppose to it.
It is learned that the bottom line of China is not more than 33%, but taking the actual situation in the domestic steel enterprise, China is difficult to make it.
On January 27 of 2010, Zhu Hongren, spokesman of Ministry Industry and Information Technology said China imported iron ore of 630mln tons in 2009, up 41.6% year on year, and the dependence rate hiked from 44% in 2002 to 69%. That is, 70% of iron ore was imported from oversea. Industry expert said it is a crucial reason why China can not hold the speaking right for several years.
Li Chuangxin, director of China Metallurgical Industry Planning and Research Institute predicted in China’ s steel market analysis and forecast of 2010 that the domestic steel capacity will continue rising in 2010. China had a steel production of 700mln tons in 2009, hit record high. |
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