investor presentation good read!!, page-5

fe prices set to rise looks like Chinese conceding that Fe prices will have to rise:

"IN a sign that Chinese steel mills may be on the point of conceding that iron ore prices will rise, official state media yesterday reported expectations of a 5-10 per cent hike.

China's media had previously trumpeted calls from the steel mills for contract iron ore prices to fall this year, but yesterday the China Securities Journal was quoting analysts saying that there was a "very large possibility" of prices rising.

This contrasts with last week's strongly worded government warnings that Beijing wouldn't accept "unreasonable" price demands from major producers Rio Tinto, BHP Billiton and Brazil's CVRD, who it accused of acting like monopolists.

"In clear contrast with the Government's great attention (to the price talks) the steel industry's attitude has been one of silent reticence," the paper noted.

China accounts for half of Australia's iron ore exports, which are forecast to reach $14 billion this financial year, on the back of higher prices and volumes.









Daiwa Securities head of research in Melbourne, Mark Pervan, said the report could be a sign that the steel mills led by Baosteel might be conceding that prices would have to rise.

"What it could signal is a nearing in the completion of the annual price negotiations, now that both consumers are on the same page," Mr Pervan said, sticking by his forecast for a 20 per cent rise.