FYI | Apr 11 2006
As is usual the case at this stage of the annual iron ore contract negotiations between the major producers and their largest customers, the rumour mill is spinning at full throttle. There’s been a settlement! There’s been a settlement at 10%! Thus went the rumour over the past few days. So far we have yet to see the first official confirmation of any such event.
A confident Baosteel official was quoted in the media yesterday, trying to reinforce the company’s confidence that goes with the fact it is China’s largest player in the field, while at the same time trying to squash preliminary investor excitement. There has been no agreement as yet, even though the market appears to be taking an increase of 10% as a given benchmark for this year. (Last year the price increase was a whopping 71.5%).
What all this teaches investors is that when the news breaks about a settlement, any achievement by the producers above 10% will be seen as a positive, anything below that figure will be greeted with disappointment. Investors should remember the Chinese are pushing for no price increase at all.
The confident Boasteel official was also quoted saying that if anyone would break the news it would be China’s largest producer of steel (Baosteel, that is). Luckily, for us non-Mandarin speakers, the company does have an English website. Don’t bother Googling, the web address is http://www.baosteel.com/english_n/indexe_n.html