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Baosteel settles deal with 3 major iron ore providers

(Xinhua)
Updated: 2006-12-23 13:42

After an agreement with Brazil's Companhia Vale do Rio Doce (CVRD) on Thursday, Shanghai-based Baosteel Group agreed iron ore prices with the world's other two main producers, BHP Billiton and Rio Tinto, on Friday evening.

The price of the iron ore provided by the two Australian corporations will also rise 9.5 percent for the next financial year, said a source with Baosteel.

Baosteel has completed price negotiations on behalf of all China's steel mills with the world's three leading iron ore providers, a task that insiders had predicted would be difficult or even fruitless.

Baosteel is the first steel company in the world to settle contracts with the three giants for the financial year beginning on April 1, 2007.

It is also the first time in four years that China's steel companies have directly agreed prices with the big providers rather than following the benchmark price settled by foreign companies.

Insiders said the agreements would set the standard for price negations for foreign steel companies for the 2007 financial year.

Baosteel failed to reach agreement on prices with the world's three main iron ore providers for three successive years, squeezing margins for China's steel companies.