bhp know - world steel demand to grow in 2010, page-2

http://www.marketwatch.com/story/chinese-mills-hurt-by-iron-ore-market-2009-10-08

Oct. 8, 2009, 8:48 a.m. EDT · Recommend (1) · Post:
Chinese mills forced to dig deeper for Australian iron ore

HONG KONG (MarketWatch) -- China's efforts to secure a better deal from Australian iron producers than that agreed by major competitors earlier this year apparently backfired, according to a published media report Thursday.

Some mills were likely forced to purchase in the spot market during the September-ended quarter at average prices nearly 80% above the 2009 industry benchmarks, the Associated Press reported Thursday, citing analysis by Resource Capital Research.

Larger mills that negotiated their own deals directly with suppliers, won better terms, while smaller Chinese mills paid an average of 77% above the 2009 benchmark rate, according to the report.

China's larger steel mills broke ranks with government-controlled industry group China Iron and Steel Association (CISA) and negotiated separate contracts with Australian ore producers earlier this year.

Chinese steel mills, led by CISA, had sought a price reduction of 40% to 45% from 2008 ore-price benchmarks, compared to the 33% reduction agreed by competitors from Japan, South Korea and Taiwan.