Chinese leading steel maker WUHAN IRON & STEEL GROUP said on Monday that it had entered into a long-term iron ore contract with CORPORACION VENEZOLANA DE GUAYANA (CVG), the only iron ore producer in Venezuela. This is the first iron ore contract to be implemented at Chinese prices, signalling that China's iron ore purchase prices need not be restricted by the world's top three suppliers, BHP BILLITON COMPANHIA VALE DO RIO DOCE, and the RIO TINTO GROUP, said the Chinese steel maker.
Chinese steel makers and the top three suppliers have failed to reach a price agreement this year, as the China Iron and Steel Association, a semi-government body representing Chinese steel mills, insisted on a favorable price.
Under the contract, Wuhan Iron & Steel was given a pre-emptive right to an expanded ore supply once CVG completed its capacity expansion.
Source: Trading Markets
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