Chinese steelmakers should demand a bigger cut in iron ore prices than agreed by Japanese rivals because there is an oversupply of the raw material, the chairman of China’s fifth-biggest steel producer said.
“There are huge stockpiles at Chinese ports,” Shen Wenrong, the chairman of Jiangsu Shagang Group Co. said today in an interview. “We shouldn’t accept the Japanese steelmakers’ accord with Rio Tinto Group for a 33 percent cut", he said.
China’s steel association is discussing “counter measures” to respond to the agreement between Rio Tinto and Nippon Steel Corp. that set iron ore prices at the second- highest annual price on record, Shen said. Chinese mills, the world’s biggest producers, have previously called for prices to be as much as halved and are yet to agree an accord.
Chinese producers “can choose” to buy more iron ore on the spot market should contract agreements with producers not be reached, Luo Bingsheng, vice chairman of the China Iron and Steel Association, said May 22.
“We are already buying some from the spot market,” said Shen, who’s Jiangsu Shagang is also China’s biggest closely held steel mill. “The 33 percent cut is too far from our demand of 40 percent to 45 percent.”
Almost 40 percent of China’s 72 biggest steel mills had losses last month, the Ministry of Industry and Information Technology said May 22. The steelmakers had a combined loss of 5.2 billion yuan in the first four months, it said.
Chinese steelmakers are likely to follow their Japanese rivals in agreeing to the 33 percent cut, Goldman Sachs JBWere Pty analysts led by is Melbourne-based Malcolm Southwood said yesterday.
Source: Bloomberg
No comments:
Post a Comment