guess how low it can go., page-161

FYI.... Chinese iron ore contracts in jeopardy

http://www.theaustralian.news.com.au/business/story/0,28124,24764926-643,00.html

Chinese iron ore contracts in jeopardy

Cath Hart | December 08, 2008

Section from article:

//China has said that in the coming round of negotiations it will seek unified iron ore prices from Brazil, Australia and India for the 2009 contract benchmark.

The negotiations are currently only in their preliminary stages, but have started as rumours begin to circulate that Chinese mills can't afford shipments in the first quarter of 2009 under the 2008 benchmark prices.

Spot iron ores prices have recently slipped below annual contract prices and analysts are downgrading price forecasts for 2009 contracts as demand wanes.

The brewing iron ore price war escalated as Treasurer Wayne Swan and Trade Minister Simon Crean left for Beijing on Saturday for talks aimed at increasing trade and investment.

Mr Swan and Mr Crean will meet officials including Zhang Ping, head of China's National Development and Reform Commission, and Commerce Minister Chen Deming.

China was Australia's largest trade partner last year and the two nations clocked up $58billion worth of two-way trade in goods and services that year.

But recent falls in China's growth rate have fuelled fears that the nation may not be the West's salvation from the worsening effects of the global credit crisis.

China's economic growth has dropped sharply to its slowest pace in five years, registering just 9 per cent in the third quarter, down from nearly 12 per cent last year.

A CISA official told Xinhua news agency 42 of 71 large and medium-sized steelmakers suffered losses in October.

The financial crisis has already begun to take a toll on iron ore producers, with BHP scrapping its $135 billion takeover bid for Rio. Brazil's Vale and Rio have also curtailed iron ore production as customers delay shipments and last month Fortescue brought forward a planned shutdown of its Pilbara operations.

Both BHP and Rio refused to comment on the contract and price negotiations yesterday.