drop in io demand is good for umc, page-12

November 3, 2008...12:28 pm
Vale Backs Down Over Iron Ore Premium

Baosteel Group, the country’s biggest steelmaker, says Cia. Vale Do Rio Doco, the world’s largest iron ore supplier, has dropped its demand for a 12% premium on its exports to China. The global slowdown has led to a slump in demand for Chinese steel at home and abroad — and piles of unused iron ore piling up at Chinese ports. Vale had already raised its annual contract price for 2008 by 70%, and most Chinese steelmakers are now losing money. So Vale’s threat to withhold supplies unless the premium was paid, initiated last July before the dramatic change in market conditions, had little sting (see: “Flat Output Will Help Steelmakers Strike Better Iron Ore Deals“)

The slump is likely to lead to widespread consolidation of the industry. In that regard, this caught this Bystander’s eye: Baosteel’s chairman Xu Lejiang says that his company is looking to promote “intensive cooperation” with Taiwan’s China Steel, Bloomberg reports. The Taiwanese company’s Chang Chi-juch says the two companies are looking to share their acquisitions expertise.

The comments come as Beijing’s top envoy on Taiwan affairs, Chen Yunlin, arrived in Taipei with a 60-strong delegation for talks to push for stronger ties across the Straits. He is the most senior official to go to Taiwan since 1949.