Shares of the world’s top iron ore producers are down today despite the fact that China’s, um, iron grip on the market seems to be loosening a bit.
To recap: China said this week it is still demanding a deeper cut in iron ore prices for its steel industry, raising the prospect China might buy on the spot market, threatening contract prices. That’s been weighing on the shares of Australia’s Rio Tinto PLC (RTP), BHP Billiton (BHP), which are merging, and Brazil’s Vale S.A. (VALE).
This afternoon, Dow Jones Newswires quotes the Vice General Manager of Hebei Iron & Steel Group, which it cites as China’s second-largest steel maker by output, as saying the country’s steelmakers are still pushing for a deeper in iron ore prices than RTP’s proposed 33% cut, but that the industry is willing to accept something less than its originally proposed 40% cut.
The spokesman said while China is negotiating with RTP and BHP, it is willing to use existing reserves of ore, prepay for some delivery, and even buy on the spot market, where prices are well above what they would be with the proposed 33% price cut.
“According to Beijing-based metals consultancy Umetal,” the article reports, “Chinese spot iron ore prices hit $92 per metric ton this week, well above the $75-$76/ton which would have been locked in, had China agreed to the Japanese and Korean benchmarks. Metal Bulletin data show the average price at various Chinese ports at $81.50/ton on June 26, the last day for which data are available.”
RTP stock today is down $4.96, or 3%, at $159.02, BHP shares are off $2.47, or 4.5%, at $53.03, and Vale is off 30 cents, or 1.7%, at $17.61.
No comments:
Post a Comment