How far is the essence of China's iron ore pricing

Updated: October 20, 2015  Views: 62

Our iron ore pricing for many years has finally taken a substantial step forward. China Iron and Steel Association yesterday officially announced that the world's largest iron ore companies BHP Billiton at an international iron ore trade, the first time a Chinese iron preparation ore price index, which means that pricing has been committed to obtain iron ore, China finally had a voice. The industry believes that the international mining giant for the first time China's iron ore index is more symbolic, not for steel industry have a substantial impact in the context of the current industry downturn, our country should be just by reducing the need to accelerate the international mine development and other initiatives to increase pricing component.

The first eligible for iron ore pricing

According to the China Iron and Steel Industry Association, from Australia's BHP Billiton for the first time in China's iron ore pricing index used. It is understood that the company in September to privately proposed standard way to use two ships iron ore 62% of Shanghai Steel Union Australian iron ore fines price index, and in addition to BHP Billiton, another major international iron ore producers are also negotiating and Shanghai Steel Union, discuss the possibility of using the Shanghai Steel Union Index.

Iron ore price index is an important iron ore reference price index of buyers and sellers, after including BHP Billiton, including the global iron ore giants are called Platts index reference pricing system, while the biggest drawbacks of this system is more tend to benefit more iron ore manufacturers.

Xiamen University [microblogging] Director of China Energy Economic Research Center Lin Bo [microblogging], said iron ore pricing is determined according to market trends, in the iron ore demand is naturally the seller have pricing power, and is currently in the ore a state of oversupply, as the largest iron ore importer, China's iron ore pricing get some reasonable.

Take care of the largest buyer wishes

In the past ten years, although China is the world's largest iron ore consumption country, but has no say in pricing. In order to obtain iron ore pricing power, China has really done a lot of effort. In addition to iron ore Shanghai Steel Union price index, the March 2011, Xinhua News Agency launched a Xinhua - China's iron ore price index, China Iron and Steel Association, China Minmetals Chemicals Import and Export Chamber of Commerce, the China Metallurgical Mining Enterprise Association, in October of that year also launched a joint Chinese iron ore prices. Although China launched several iron ore index, but with little success, the international mining giant still has to take Platts index.

Deputy Commerce Department Institute of International Market Research 任白明 said, after China's iron ore index mainly reflects the demand, while international mine iron ore index used more biased in favor of supply, both of which have a certain spread, because after our steel just need to grow rapidly, international mining companies are not afraid of Chinese enterprises do not import, so they do not use China Index.

According to informed sources, the Shanghai Steel Union Platts iron ore index and index methodology of convergence, but comparative results show that the difference between annual slightly different Chinese version Platts iron ore index is lower than the index of $ 0.3 / ton.

One expert told the Beijing Daily reporter, although BHP Billiton first time China's iron ore index, but can not be blindly optimistic. BHP Billiton has been adopted Chinese iron ore index, the main reason is the current China Index and Platts index is almost the same, take care to use China's largest index both buyer mentality and willingness, nor will it result in a material impact on itself.

Absolutely still need a multi-pronged pricing

My steel net analyst 冼少娟 and other industry insiders believe that China needs to be done to secure the absolute pricing, just over 50% of international enterprises to adopt Chinese index number, and the market more than 30% of the transaction with the 'China Index' to complete 'Absolute pricing,' considered the initial victory, currently only take the first step.

'Foreign iron ore giants use China Index is more symbolic, and now the steel market in the doldrums, China should actively expand iron ore pricing. Both the need to accelerate the upgrading of the steel industry, to reduce the rigidity of demand, more production advantages, high value-added steel, so even if the future iron ore price rise, do not worry be controlled by others. 'White confessed.

Assistant Director of the Institute in Boseong futures financial Cheng Xiaoyong opinion, the 90s of last century, China launched copper futures, but only after the 2008 financial crisis, China was gradually win the right to speak, pricing start to the East. And Copper mines and overseas high dependence on foreign monopoly as high iron ore pricing competition is a long and arduous process.


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