The China Iron and Steel Association (ISA) on Friday restated that China will not accept an iron ore price which does not consider the Chinese market.

The world's leading iron ore provider, Brazil's Companhia Vale do Rio Doc (CVRD), agreed to a 19 percent increase in contract prices for iron ore with German steel producer ThyssenKrupp AG on May 16. The ISA immediately remarked that it was "unacceptable."

Following that, chief executives from 16 major Chinese steel companies have met again and reiterated their stance, an ISA official, who asked to remain anonymous, told Xinhua on Friday.

"The price for 2006 should be made not only according to the European market but also to the Asian Market, especially the Chinese market," the official said, citing that Chinese steel companies imported 275 million tons of iron ore in 2005, accounting for about 43 percent of the global marine trade volume of iron ore and 70 percent of the Asia's total imports.

Currently, the European market reports the highest price for steel, the official said.

By the end of April, the composite steel price index on the global market rose to 149 points, close to last year's highest 153.4 points. However, the composite steel price index on the Chinese market only reported 105.67 points at the end of April, down 23.6 percent from March's highest 138.33 points, the official said.

"Under such circumstances when the Asian market, especially the Chinese market, is at a low price level, Chinese steel companies would not accept a decision made without taking into account the Chinese market," the official said.

According to the information collected by the ISA, not a single Chinese or Japanese steel company has made clear its attitude towards the price agreement reached by the CVRD and ThyssenKrupp AG, the official said.

"That is to say, the iron ore price for the Asian market is yet to be decided," he said.

"A few enterprises did not follow the rules of the negotiations and imposed pressures on Chinese steel enterprises, to which we are resolutely opposed," he said.

The official cited that some enterprises, in negotiations, linked the the iron ore supply contract with the coal supply contract. "Such a practice is improper."

He also said that "the current mechanism for negotiations calls for improvement and perfection."

There is still disagreements between steel companies and mining companies in pricing different sorts of iron ore imports, such as lump ore, ore fines and iron pellet, according to the official.

Therefore, the ISA hope the negotiations can go on between the two sides of supply and demand, he said.

"The negotiations must give thought to the long-term interests of both parties," he said.

"It is inadvisable to just consider the temporary interests while giving up the long-term interests," he added.

Major iron ore miners sign long-term supply contracts with major steel companies and the price is set through negotiations every year. Arcelor, representing the European steel companies, is negotiating with CVRD. Japanese Nippon Steel and China's Baosteel remain in talks with Australia's two big iron ore miners, Rio Tinto and BHP Billiton, respectively.

The price would be adopted as a benchmark price for all iron ore products during the year if any of the three sets of partners reach agreement.

Source: Xinhua