Steel Prices Rise Sharply Or Push Up Heavy Steel Industry

After oil prices rose to nearly $140 a barrel for half a year, Australia's iron ore negotiations in Australia took the lead in raising prices, or bearing low profits or even selling cars at a loss at 100.

In June 23rd, China Baosteel Group's iron ore price negotiations between Chinese steel mills and Australian mining giants finally reached agreement at the "last minute".

According to the agreed price agreement, the price of the three major iron ore, PB powder mine, Yang Di powder mine and PB block ore, will rise by 79.88%, 79.88% and 96.5% respectively on the basis of price in 2007.

According to the calculations of the relevant agencies, the agreement price of the flour mine has increased by 79.88%, which will increase the purchasing cost per ton of China's steel mills by 41.8 US dollars last year, and the cost of smelting a ton of pig iron will increase by 65 US dollars accordingly.

In addition to losing more than 4% of profits to the carmaker, the iron ore price negotiations will also lead to a rise in the cost of real estate development companies, but the increase may not exceed 10%.

Next year, the price of iron ore is hard to say that according to the rules of iron ore price negotiation, the price reached by China Baosteel Group and Australian mining enterprises as negotiators will be accepted by the domestic iron and steel industry.

Prior to that, Baosteel and Brazil vale have reached an agreement that the price increase of the southern Brazil system powder ore and the Ka La gas powder mine is 65% and 71% respectively.

Before the agreement was reached, the market expected that the price increase between Asian steel mills and Australian mining enterprises would be between 80% and 85%.

Some agencies even predict that the increase will be as high as 95% to 100%, which is the highest in history.

The negotiations between Baosteel and Australian iron ore producers lasted for four months.

It is reported that over the past four months, the focus of negotiations between China and Australia is that the Australian side requires Chinese steel mills to compensate for the cost of ocean freight in accordance with the principle of the same price for the same thing, so as to smooth the gap between the Brazil mine and the Australian mine, while the Chinese side believes that this requirement subverts the previous negotiation pricing system and resolutely resists it.

Analysts said that in the Sino Australian price agreement, although there was no word of "Freight allowance", the Australian ore rose by nearly 15 percentage points higher than that of the Brazil mine.

However, the traditional framework of pricing has remained unchanged.

Iron ore research experts have held that the signing of the Sino Australian mineral price agreement has added some uncertainties to the future iron ore negotiations.

Will Australian mining enterprises make the same request next year?

Will Brazil mining enterprises also put forward their own additional requirements?

At present, there is no clear answer to all these questions.

On the 23 night of Baosteel's announcement, the market participants said the result was both unexpected and reasonable.

It is understood that market participants have previously estimated that the latest in this week, either the result, or talk about collapse.

The collapse of China will inevitably lead to both sides: China's steel mills will "resist" Australia's mines, while Australian mining enterprises will "arbitrarily sell prices" to enter the spot market.

Market order is bound to be chaotic.

Baosteel: the price of iron and steel must rise. "The achievement of this result reflects the sincerity of the two sides in maintaining the traditional pricing mechanism, and is the result of the joint efforts of the enterprises with a sense of responsibility."

On the outcome of the negotiations, Baosteel said that in order to maintain the traditional pricing mechanism, maintain the normal market order, and maintain long-term and friendly cooperation between upstream and downstream, Baosteel and Australian mining enterprises have reached an iron ore price agreement after friendly consultations.

With this price increase, iron ore has accounted for 65% of Baosteel's raw material cost.

Baosteel disclosed that the price of steel produced by the company would definitely rise, but the expected increase would not be given at present.

A spokesman for Baosteel said that the price of the company's products would depend on cost and market demand.

It is reported that international iron ore prices have been rising for many years, and the fundamental reason is that the supply and demand relationship has played a decisive role.

According to relevant statistics, from 2003 to 2007, the annual output of crude steel increased from 9.7 million tons to 13.4 million tons, of which China's output increased from 2.2 million tons to 4.9 billion tons.

Correspondingly, the annual volume of global iron ore annual shipping trade has increased from 5.2 billion tons to 7.7 million tons, with an average annual growth rate of over 10%.

Iron and steel prices to promote the promotion of steel key industries, real estate market, car market are key industries of steel.

The same machinery industry: leather machinery, shoemaking machinery, due to the impact of many factors such as the industry downturn, profits fell to the accumulation point.

What are the impact of the new steel price increase on the industry?

The profit space is further reduced and the survival is worrying.