A Chinese steel association and a chamber of metals trade said Thursday China's steel mills have agreed to a 19 percent price hike for iron ore, while voicing a pity that "negotiations breached rules."

A joint statement issued by the China Iron and Steel Association and China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters expressed a "strong hope" that both sides make a joint research into and seek a reasonable solution to the out-of-rule behavior in the talks.

China's biggest steelmaker, Baosteel Group, which was representing other major Chinese steelmakers in the negotiations, agreed Tuesday with Australia's BHP Billiton Ltd.

And similar agreements also were reached with Australian miner Rio Tinto Group and Brazil's Companhia Vale do Rio Doce SA. The details would be released later in the week, earlier media reports said.

The 19 percent price increase follows a 71.5 percent hike in iron ore prices in 2005. China's booming economy, which grew about 10 percent in each of the past three years, has to be fueled by large amounts of raw materials, such as iron ore, analysts acknowledge.

The association and chamber statement said the cost, insurance and freight (CIF) for Australian and Brazilian iron ores had a striking gap. "As the next step, both supply and demand sides should study a rational solution."

In a move to "streamline the order of iron ore imports," the statement called on iron ore enterprises to speed up consolidation and turn spot transactions into long-term contracts in line with the international practice.

World importers and exporters should set up long-term, stable ties in the pursuit of joint development and a win-win result, it acknowledged.

"Any acts which violate the principle are not the right choice, and the association and the chamber will go on striving for safeguarding the principle."

China has announced plans to cut back on production by substandard steelmakers, aiming to eliminate an annual 100 million tons of iron ore capacity and 55 million tons of steel capacity over the next five years.

But government figures show that iron ore imports have been steadily rising to roughly 276 million tons in 2005 from 208 million tons in 2004 and 140 million tons in 2003.

Source: Xinhua