Long-term iron ore prices are not expected to see big ups and downs in the
coming year, insiders said as negotiations between Chinese buyers and the
world's major suppliers began.
Shanghai's Baosteel Group Corp has begun
early discussions over the contract price for iron ore next year with Brazil's
Companhia Vale do Rio Doce (CVRD).
Qi Xiangdong, deputy secretary-general
of the China Iron and Steel Association was quoted by foreign press as saying he
expects iron ore prices to change only by "a small margin" next year.
Investment banks, including Morgan Stanley and Daiwa, predicted the
prices will go up 5 to 10 per cent while Citigroup and UBS expect the price to
decrease by 5 to 10 per cent.
The Chinese side argued iron ore prices,
which have increased 70 per cent in 2005 and 19 per cent this year, are
irrationally high.
China is diversifying its sources of iron ore imports
by increasing imports from India and increasing production at home to minimize
dependence on iron ore from Australia and Brazil.
China's imports of iron
ore will total 320 million tons this year, indicating annual increase will slow
to around 10 per cent, predicted the China Steel and Iron Industry
Association.
Luo Bingsheng, vice-president of the association said in
earlier interviews that China's demand for imported iron ore will continue to
drop slightly.
The country's iron ore imports increased over 30 per cent
in average annually in the past five years.
Sixteen major steel
manufacturers and China's largest two iron ore traders, China Minmetal Corp and
Sinosteel Corporation, are reportedly being included in the negotiating body
next year. The report was confirmed by an unnamed official with Sinosteel, but
he said China's negotiating body with miners will still be headed by
Baosteel.
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